Why You Might Care That the US Dollar Is Incredibly Weak
I’m not a currency trader, but I am interested in the movement of the dollar from an inflation point of view. For what it’s worth, I believe the US dollar will continue a slow slide against all major currencies for the foreseeable future. I think that’s, in part, because of the Fed continues to print money as fast as it can. (Here’s how the Fed generates inflation by doing so)
Anyway, the Euro recently hit a record high against the dollar. The British pound and Canadian dollar are both near record highs against it. The pound sterling is worth over two US dollars; the Canadian dollar is almost at parity with the US dollar.
Who cares, right? Wrong. Currency risk is one of the risks listed in any international fund prospectus. What that means for us practically is that investments in international funds benefit generally from a weak dollar (I’m ignoring the macroeconomic effect on trade). In other words, if you’ve invested in international funds, you return in US dollars is going to be higher. It’s one of the benefits of international investing when the dollar is weakening.
Euro versus US Dollar
Pound Sterling versus US Dollar
Canadian Dollar versus US Dollar
