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.
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