Move your loan in the right direction
The standard progression when dealing with change involves three stages: awareness, transition, and new reality. Whether change occurs gradually or hits like a lightning bolt, when we do become aware of it we may feel overwhelmed, shocked, outraged. If we perceive it to be negative or threatening, we may slip back into old behavior to help cope with it. We ask ourselves, “What’s happening?” or, “Why is this happening to me?” Even if we perceive the change to be positive, we can be anxious. Remember how it felt when you went to that job interview you were so excited about?
Once we acknowledge the change, we begin to feel lost—like we are stumbling in the dark.We know the past is changing, but we’re not quite sure what the future looks like. This is the transition stage. During transition we spend time reflecting on the future, think about what we want, and take action to help move us in that direction. At this point other people help ground us and give us input to gain clarity about our future and the new reality. As the new reality begins to take shape, we feel stronger.We know more about ourselves and what we want.We’re ready to take action and set new goals for ourselves.
The impact of credit on operating income
The paper sector is only mildly exposed, since in general companies generate no more than 20 percent of their revenues in the United States. The more internationally oriented technology and chemical companies like Siemens, Philips and Akzo generate about 30 percent of sales in the United States, and have substantial further sales outside the Euro area. Yet, the impact on operating income is reduced by the fact that a significant part of costs accrues in US operations. Additionally, most industrial companies engage in hedging activities. Among the companies with a high exposure to currency risk are UK companies FKI and Pearson that both generate more than 60 percent of sales in the United States. When the US dollar depreciates significantly, these companies are hit hardest.
With respect to their vulnerability against currency movements, companies from the consumer sector benefit from their broad geographic diversification.
It appears to be common policy to match assets and liabilities in the various regions to minimize overall currency risk. However, while transaction risk is accounted for, companies tend to leave translation risk unhedged. But many of the well-known European consumer companies like Nestle and Unilever have been able to raise funds in US dollars. Thus US dollar denominated debt exceeds assets and earnings. During the US dollar weakness those companies have seen their debt and interest burden diminish faster than their earnings. UK tobacco companies tend to finance a significant part of their business with Euro denominated debt, leaving them exposed to a strengthening of the Euro versus Sterling.