Tuesday, August 08, 2017

The weakening dollar is having rippling effects around the world

See The Dollar Swoon Lifting U.S. Stocks Is Poised to Continue: Bets on the greenback’s weakness is increasing—a result that would benefit commodities, emerging markets by Ira Iosebashvili, Chelsey Dulaney and Riva Gold of The WSJ. Excerpts:
"weighed down by scant inflation and doubts whether the Federal Reserve will raise rates anytime soon."

"the WSJ Dollar Index remained down roughly 7% since the start of the year and has declined for five straight months."

"the index, . . . measures the dollar against a basket of 16 currencies"

"with gridlock in Washington putting those policies [tax cuts and infrastructure spending] in doubt—or at least on hold—many believe the dollar stands to fall further."

"A weaker dollar is typically good for shares of U.S. exporters, making their products cheaper for overseas buyers.

S&P 500 companies got about 43% of their sales abroad in 2016"

"A falling dollar helps commodities, too, which are priced in the U.S. currency and become more affordable to foreign investors when the dollar declines."

"Signs that central banks plan to wind down the easy-money policies that have helped boost risky investments hurt assets in developing countries last month, when flows into emerging market funds slowed or even turned negative.

But those fund flows have picked up again recently, analysts say, in part because of the weakening dollar. A weaker U.S. currency makes it easier for these countries to pay back their dollar-denominated debt."

See Trade Weighted U.S. Dollar Index: Major Currencies (DTWEXM) from the St. Louis Federal Reserve Bank. The dollar finished 2016 at 95.76 and was at 88.53 on Aug. 4.

Related posts:

Why Is The Dollar Down 5.6% This Year?

Why Did The Value Of The Dollar Rise More Than 20% From July 2014 To March 2015?

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