Blog: Dave Leggett2005 will be $/€ rate crunch time for BMW

Dave Leggett | 19 March 2004

BMW's management is taking a gamble on the dollar-euro exchange rate. The company believes that the dollar is now fundamentally undervalued versus the euro and has decided that it does not need the currency exchange rate hedge cover that protects future earnings from adverse currency movements. Analysts say that 2005 will be crunch time; 2004 is seen as more or less on target at this stage. But if BMW's exchange rate assumptions prove incorrect, a big hole in earnings could result in 2005 due to factors outside of the company's control. As one investment bank puts it: the clock is now ticking. The boys in BMW's currency forecasting department had better be hot.


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