The U.S. dollar has lost nearly a third of its value in comparison to other international currencies since 2002. Depending on who you are, that may be the best – or worst – news you could possibly hear.
While financial experts may argue the many pros and cons of an anemic dollar, the New York Times has constructed a handy breakdown of who the biggest winners and losers are in today’s economy whenever the dollar goes belly up.
Among the biggest winners:
- Investors: The economic downturn has actually caused stocks to rise in correlation with the dollar dropping. When the financial crisis hit, global investors saw the dollar as a safe haven, boosting its value. More recently, investors are taking risks again, putting their money in other currencies. As a result, stocks are on the rise and the dollar has dropped … again.
- Countries with vast resources: A lot of commodities are bought and sold in U.S. dollars. When the dollar falls, the prices for these commodities (e.g., oil, energy sources, raw materials, etc.) spikes.
- American industry: When the dollar falls, so do prices for U.S. products in other countries. As a result, revenue and production in some industries may grow. The downside is that the imported raw materials and energy needed to produce these goods may rise.
Among the biggest losers:
- China’s central bank: Chinese currency is tied to the American dollar. As the dollar goes, so goes China’s renminbi. Unlike American stocks, when the dollar falls, Chinese holdings drop significantly.
- Foreign industry: When the U.S. currency flounders, a lot of imported products cost more in the U.S., causing foreign companies to lose international sales.
Who else loses big when the dollar sinks? Who’s actually in a position to thrive? Share your feedback in the comments section below.
Click here for the New York Times‘ complete chart.
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Tags: business, dollar, economy, international, investments, Recession, Stocks