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Get Started in Shares by Glen Arnold

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Export potential and currency shifts

If your company exports much of its output it can be badly affected by a rise in the value of its currency. German, Ghanian and Goan customers of your UK manufacturer see price rises of, say, 20% when other potential suppliers have kept prices steady in euros, cedis or rupees. Your company could decide to keep the price constant for its overseas customers in their currencies, but that will result in a 20% cut in amount received in pounds. This could wipe out profits.

Even if your company is British and sells only to UK customers, it might be badly affected by a rise in the pound. Now customers can buy from overseas competitors at lower amounts in pounds.

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