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Brewer SABMiller, which is world's second largest in terms of market share and is the target of takeover interest from its bigger rival Anheuser-Busch InBev, has reported its second quarter results which clearly shows the need for FED policymakers to consider their action and communication in light of stronger Dollar.
Exchange rate is not a policy measure or target for Federal Reserve but it should learn lessons from European Central Bank (ECB), which has made it an indirect one (unofficial) due to its impact on inflation.
Why Dollar should be considered?
Learn it SABMiller way.
- Excluding the effects of currency movements, SABMiller group's net producer revenue improved by 6%, compared to growth of 3% in the first quarter.
- However, on a reported basis, net producer revenue has declined by 9% due to strong dollar against key currencies. Similar 9% decline for first quarter against 3% growth without currency adjustment.
Stronger Dollar, not only risks lower inflation for prolonged period, it would also discourage investments by the corporates, whereas stronger for too long risks shift in manufacturing away from US.
