The euro hits its lowest since May 2025: currency risk weighs on the dollars paid out that sales do not bring back

5 October 2026, 09:42

This morning, in Asian trading, the euro fell as low as $1.1161, its weakest level since May 2025. Bloomberg reports it, linking the fall to worries about public finances and political stability in some euro-area countries; other outlets add the rising yields on US government bonds, which make the dollar more sought after. When the Continent's stock exchanges opened, according to ANSA (Italy's main news agency), the single currency was worth $1.1197.

The reference rate that the European Central Bank publishes every working day measures the distance travelled: on 2 October 2025 one euro was worth $1.1754, last Friday $1.1225. In plain terms: a year ago a greenback cost 85 euro cents; by the end of last week it cost 89.

The supplier's price list has not moved, the invoice in euros has

For an Italian business that buys in dollars, those four cents are a price rise that nobody decided. The American supplier, or the Asian one invoicing in the same currency, has not touched its price list: what has gone up is the currency it is paid in. Anyone who has been on holiday in the United States and opened their credit card statement on returning home knows this: the menu was the same, the figure in euros was not. And no waiter had changed a thing.

The same happens, later and out of sight, to anyone who buys in euros from a European distributor a raw material that is traded in US currency on international markets, such as oil, quoted per barrel in dollars in this morning's figures too. The distributor pays its own supplier in that currency, and sooner or later its prices in euros tell the story.

The real risk is the gap between the currency going out and the currency coming in

The same movement, seen by those who sell in the United States, goes the other way: at an unchanged price across the Atlantic, every invoice collected is worth more euros. That is why the first number to know is not the single currency's exchange rate but one's own net exposure: payments in dollars over the next twelve months minus receipts in the same currency. If the two flows match, a weak euro makes purchases dearer and revalues sales by the same amount, and the margin stays where it was. It is called a natural hedge and it costs nothing; it works best when outflows and inflows fall in nearby months.

An example. A company with a turnover of €15 million buys raw materials worth $5 million every year and sells everything in euros. At the ECB rates of a year ago and of last Friday, the same spending now costs about €200,000 more: 1.3 points of EBITDA lost without a single price list changing. If half of that currency came back from American customers, the loss would be halved.

In the accounts, part of the price rise ends up far from the raw material

Then there is a detail that confuses anyone reading the accounts. Under the Italian accounting standard OIC 26, a purchase in a foreign currency is recorded at the rate of the day on which the transaction takes place, and that amount goes into the cost of raw materials. The difference between the rate on the invoice and the rate on the day the supplier is paid goes instead into a separate line of the profit and loss account, item C17-bis, "exchange gains and losses", among financial income and charges. With payment terms of 60 or 90 days and a falling euro, a slice of the price rise leaves the industrial margin and reappears further down, where it looks like a banking matter. To know what the raw material really costs, the two lines have to be read together.

Anyone who does not want to keep the net exposure open can fix the rate in advance with a forward purchase: a contract with the bank that sets today the rate at which the dollars for a future payment will be bought. It removes the uncertainty, and with it the gain if the euro were to recover. It is a prudent choice, not a bet, and it is done well only on a number counted beforehand.

The euro's path cannot be forecast. The dollars that go out and those that come back, however, can be counted.

This article was prompted by a news item published in Bloomberg on 5 October 2026.