What a Weakening Dollar Really Means for Investors
Currency fluctuations do have short-term effects, but most long-term investors can safely tune them out.
Question: I keep hearing that the dollar is weakening. What does that mean for investors? Will stocks decline, too?
Answer: The U.S. dollar has been on the decline this year. From a high of 0.96 at the start of 2017, the greenback fell to a low of 0.88 versus the euro on May 22. That's a slump of more than 8%. The Trade Weighted U.S. Dollar Index, which measures the strength of the U.S. dollar relative to other world currencies, has also slid 3.7% over the year. (Some perspective is needed, though: Both levels are high relative to those over the past 10 years.)
Karen Wallace does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.