Will a weaker euro lead to greater US investment in European startups?

Which startups will benefit the most from a strengthening greenback? And will changes in the value of major currencies lift any particular region?

The U.S. dollar is having a good year. The U.S. Dollar Index, which tracks the value of the dollar against other currencies, for example, bottomed out at around 95 points in early January. Since then, the metric has appreciated to 106.69 points as of today — and we’ve seen the U.S. dollar reach parity with the euro, the latter currency having enjoyed a premium over the former for the last 20 years.


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The changing relative value of major currencies is impacting technology earnings. American tech giants, for example, reported large currency-related impacts on their Q2 results. Microsoft grew 12% in the second quarter of 2022 – but 16% if we stripped out the impact of currency swings. The same issue also cost Microsoft five percentage points of net income growth in the same period.

Microsoft was not alone. Outgoing Meta COO Sheryl Sandberg said during her company’s latest earnings report that changing currency values “had a significant impact in Q2, in particular the depreciation of the euro relative to the dollar.” Indeed, the now-infamous year-over-year revenue decline that Meta reported in the second quarter would have actually been 3% revenue growth had currencies stayed put, Sandberg said.

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