The Opportunities — and Pitfalls — of a Fluctuating
Dollar
As of this writing, the U.S. dollar is coming off sharp gains
relative to its currency counterparts around the world. Such a
situation — or its reverse, a falling dollar — is
likely to have profound effects on the global economy and financial
markets, not to mention on individual businesses, consumers and
investors.
In other words, shifts in the value of any currency create
financial winners and losers. Understanding why can give you
insight into your portfolio's past performance, as well as
ideas about how you might position it appropriately for the
future.
Foreign Exporters Benefit
When the dollar is strong, it is a boon for foreign companies
that sell products to Americans. Why? Because the profits they
receive in dollars are worth more after those dollars are converted
back to their local currency.
