Corporate treasurers like predictability. Stable markets mean cashflow projections for the short- to medium-term hold true and life is less stressful.
Unfortunately, this is not a predictable world.
Today, the gyrating euro-US dollar exchange rate is high on most treasurers' minds. Year-to-date the euro has depreciated against the dollar 14.3% to $1.23 this past Friday -- its lowest point in years -- while a chart of the exchange rate since May 2007 looks just like a cut away of the Rocky Mountains -- all peaks and valleys with very little stability. The value of the euro against the dollar peaked at $1.60 in April 2008.
Exchange rate volatility is a...