As the news of the tapering of the QE begins to roll out, many investors are cautioned that interest rates may somewhat increase sooner than later. One potential result out of this is the strengthening of the US Dollars, which have been declining since the Fed announces the beginning of the QE in 2010. You may think that the impact on the exchange rate on a company's margin is immaterial. But that is often not necessarily the case. Investors need to understand the effect that exchange rates can have on the financial statements, especially if the company you are investing have its earnings or costs denominated in USD.

One company which will benefit from this strengthening of the USD is ST Engineering. Based on report from UOB Kay Hian, every one-cent increase in the USD will lead to about $20 million increase in revenue and $2 million increase in ...