Citi takes $2.4bn hit

Dollars

Will it get any better in the second-half ?

Citigroup, the U.S. firm that operates in more than 160 countries, posted a $2.41bn first-half equity deduction from currency swings, approaching analyst Charles Peabody’s forecast for a year of foreign-exchange pain.

Bloomberg News reports that Peabody, who leads research at Portales Partners LLC, predicted last month that a drop in the value of emerging-market currencies would cost Citigroup $5bn to $7bn in regulatory capital this year.

Citi said at the time that it hedges against foreign-exchange losses. The capital deduction increased to $1.7bn in the second quarter from $711m in the first, according to figures from the company Monday.

'The currencies that hit us the most this quarter would have been the peso, maybe a little on the Indian rupee, the reais had some impact on us', Chief Financial Officer John Gerspach said on a conference call with reporters, referring to Mexico’s peso and the plural word for Brazil’s real. 'It was fairly widespread'.

Peabody said in an e-mail that he expects losses to accelerate in the second half of this year as the dollar becomes stronger and volatility in Asian currencies increases.

Hit the link below to access the complete Bloomberg article:

Citigroup Sustains $2.4 Billion First-Half Currency Hit

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