Which is it and what does it mean to you? People say it…”and the dollar is weak, too”, without knowing the consequences for their own portfolio. People are still saying it without knowing that the dollar recently reached a 7 year high.
The U.S. dollar is used to measure so many things around the world. It’s difficult to measure the value of the one thing that measures everything else. The terms “strong” or “weak” in reference to currency is simply a comparison to another currency. In the case of the dollar, the comparison is to countries with which the United States trades the most.
The dollar is rising, mainly because people from other countries seek to invest in American investments. However, there are challenges with this type of environment. A strong dollar makes our exports & American travel more expensive. Businesses or people that rely on export sales or tourism may find this difficult. If investing in gold is your thing, a strong dollar is not what you want. The price of gold is inversely related to the value of the dollar.
There are positives, though. We can import things cheaper – (good for Christmas shopping!), gas prices are cheaper, travel is cheaper. American investments get a boost from the attractiveness to foriegn investors.
The value of the dollar can affect you financially both positively and negatively. Your portfolio may get a boost, but your company may see difficulty. As with everything, the dollar won’t remain strong forever. But, when it does begin to weaken, other benefits will emerge.