I make a ton of currency swaps in my line of work. It goes with the territory. But lately it's been a harrowing experience.
Many currencies around the world have been a mess for the last few months. The value of the British pound, for example, has dropped 13% against the dollar since July 2014.
At the same time, the Canadian dollar has plummeted 15% against its American counterpart. And the Colombian peso -- another currency I'm frequently buying -- is down an astounding 28% over the same period.
I'll admit it's been quite a hassle lately. I almost ran out of pesos in the Colombian countryside recently because of it. But what has me really worried is how these "currency wars" are starting to effect businesses and stocks valuations around the world.
Let me show you what I mean.
A few months ago, in my premium advisory Top 10 Stocks, I discussed how the massive and often-unprecedented fluctuations in currency rates have been crushing profits and lowering the valuations of many of the world's most well-known and established companies.
I showed how over the span of a year, the U.S. dollar increased significantly against each of the five major currencies -- the euro, yen, pound, Australian dollar and Canadian dollar.
Since then, the chaos has largely continued. Take a look.
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What that tells me is that any companies selling products in these respective countries are currently fighting an uphill battle.
Consider the example of Philip Morris International, Inc. (NYSE: PM).
Philip Morris makes most of its revenues selling tobacco products outside the United States. These international operations were spun off from U.S. parent company Altria Group (NYSE: MO) in 2008.
This past year, Philip Morris made 31% of sales in the European Union; 34% in Eastern Europe, the Middle East, and Africa; and 26% in Asia. The company does business in currencies ranging from the euro and the Russian ruble to the Turkish lira and the Indonesian rupiah.
The problem is that Philip Morris is an American-headquartered and American-traded company. This requires the firm to translate all of its international earnings back into U.S. dollars for corporate and reporting purposes.
And that's been presenting some challenges.
During 2014, Philip Morris saw currencies in some of its biggest markets globally take a significant dive against the dollar (including the Argentine peso, Canadian dollar, Japanese yen and several others).
That means when it brings international profits back to the States, the firm receives fewer U.S. dollars today than it did a year ago. In fact, management estimates currency fluctuations subtracted as much as $5.3 billion from the U.S. dollar-denominated bottom line in 2014.