We find that about 13% of our sample of 817 european multinational firms experienced economically significant exposure effects to the japanese yen, 14% to the us dollar and 22% to the uk pound. Our evidence differs substantially from the us experience and is robust across sub-sample periods, suggesting that a depreciating (appreciating) euro against foreign currencies has a net negative (positive) impact on european stock returns. Short-term exposure seems to be relatively well hedged, where considerable evidence of long-term exposure is found. Firms with weak liquidity positions tend to have smaller exposures. Foreign exposure is found to increase with firm size.