Currency and Financial Stability

Financial stability is a crucial factor for businesses operating internationally. Currency fluctuations, inflation, and access to stable banking systems can greatly impact profitability. By maintaining corporate structures in multiple countries, businesses can hedge against economic uncertainties, optimize financial transactions, and safeguard their assets.

Currency fluctuations and inflation impact business profitability under global market dynamics: .

Exchange Rate Advantages

One of the biggest risks for companies operating in emerging markets is currency volatility. By strategically managing revenues and expenses in different currencies, businesses can reduce financial risks.

• Euro (EUR) vs. Turkish Lira (TRY): The Turkish lira lost 52% of its value against the euro in 2023 alone (Turkish Central Bank, 2023).

• Hungarian Forint (HUF) vs. Euro: The forint depreciated 8% against the euro in 2023, but remains closely tied to EU financial policies (Hungarian National Bank, 2023).

• U.S. Dollar (USD) vs. Turkish Lira: The lira lost 47% of its value against the USD in 2023, impacting companies reliant on USD transactions (IMF, 2023).

A Turkish company that generates revenue in euros but pays operational costs in lira can save up to 50% on expenses due to exchange rate differences. Similarly, a European business outsourcing production to Turkey can benefit from paying salaries in lira while earning in euros.

Financial Protection Against Local Economic Crises

• Turkish inflation reached 36% in 2023 (Turkish Statistical Institute, 2023), increasing business costs for companies operating only in Turkey.

• Hungary’s inflation rate in 2023 was 17%, but its EU status provides more stability (Eurostat, 2023).

• Germany’s inflation rate was only 6%, making it a preferred financial base for global companies (Deutsche Bundesbank, 2023).

By maintaining an entity in Hungary or Germany, a Turkish business can protect assets from local currency devaluation and secure financing in euros at lower interest rates.

Access to EU Banking and Financial Systems

Many international businesses face challenges in securing stable banking services outside the EU.

• Turkish companies operating through a Hungarian or German entity can access EU-based banks, reducing restrictions on foreign transactions.

• EU-based businesses enjoy stronger investor confidence, lower interest rates, and financial protection under EU banking regulations (European Central Bank, 2023).

Conclusion

By establishing corporate entities in stable financial markets, businesses can hedge against currency risks, protect assets, and optimize financial transactions. Whether managing international payments, securing financing, or mitigating exchange rate losses, a well-structured multinational business framework ensures long-term financial security.

References:

• Turkish Central Bank (2023). "Exchange Rate Reports." Retrieved from: https://www.tcmb.gov.tr

• Hungarian National Bank (2023). "Monetary Policy and Currency Stability." Retrieved from: https://www.mnb.hu

• IMF (2023). "Global Currency Trends and Economic Stability." Retrieved from: https://www.imf.org

• Turkish Statistical Institute (2023). "Inflation and Economic Indicators." Retrieved from: https://www.tuik.gov.tr

• Eurostat (2023). "Inflation Rates in the EU." Retrieved from: https://ec.europa.eu/eurostat

• Deutsche Bundesbank (2023). "Germany's Inflation and Financial Stability." Retrieved from: https://www.bundesbank.de

• European Central Bank (2023). "EU Banking and Financial Regulations." Retrieved from: https://www.ecb.europa.eu