Will a weaker euro lead to increased US investment in European startups? – Tech Crunch
Which startups are going make the most of a strengthening greenback? And will changes in the value of major currencies boost a particular region?
The US dollar is having a good year. The US dollar index, which tracks the value of the dollar against other currencies, for example, hit a low of around 95 points in early January. Since then, the metric has appreciated to 106.69 points so far – and we’ve seen the US dollar reach parity with the euro, with the latter currency enjoying a premium over the former over the past 20 years. years.
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Changes in the relative value of major currencies have an impact on technology earnings. US tech giants, for example, reported large currency-related impacts on their second-quarter results. Microsoft grew 12% in the second quarter of 2022, but 16% if we remove the impact of currency fluctuations. The same issue also cost Microsoft five percentage points in net income growth over the same period.
Microsoft was not alone. Outgoing Meta COO Sheryl Sandberg said in her company’s latest earnings report that changing currency values ”had a significant impact in the second quarter, particularly the depreciation of the euro against the dollar. “. Indeed, the now infamous year-over-year revenue decline that Meta reported in the second quarter would have actually been 3% in revenue. growth if the currencies had stayed in place, Sandberg said.