BusinessBrief.com » Who wins and loses when the dollar plummets

Who wins and loses when the dollar plummets

December 30, 2009 by Bob Hill
Posted in: economy


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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