Yesterday's interest rate hike by the Bank of Japan shows a cyclical trend to less collaborative efforts by the G10s to stabilize currencies resulting in continuous and increasing currency volatility. This volatility will continue to highlight inefficiencies in the way many corporations are managing their currency exposures - having in most cases tasked the under funded treasury departments to do a lot (manage the entire companies currency exposure) - equipped with little if anything. The result of missing earnings or having to adjust forecasts are very costly (i.e. SAP lost USD 6 Billion in market cap by adjusting forecast by USD 100 mil.) and should be taken very serious by the C level and the Board of Directors. (Treasurers in organizations are already taking this seriously, but can only do so much with little to no budget.) CFOs and CEOs specifically should recognize the pressures that the treasury department is under. When they get lucky they get praised - typically no bonus consideration - when they get unlucky and currencies go against them they fear for their job. In my opinion a bad risk reward for any employee.
Caution: Professor FiREapps sees a continuous problem of inaccurate re-measurement within the guidelines of FAS 52. The focus has been FAS 133 and little if any focus has been given to FAS 52. We see the problem having occurred as many companies were and still are moving to an enterprise wide system that is configured/accounts set up by junior staff members that do not fully understand what accounts need to be "FLAGGED" for re-measurement purposes under FAS 52. As the setup is in many cases tedious this is not reviewed periodically (i.e. quarterly). A tool is available to get FAS 52 indicative reports for compliance or possible issues.
Please let me know what you are seeing with respect to
