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In form of The economy struggles, It has been a rough month for the US dollar. Our currency may be on track for the weakest month in nearly a decade, according to Wall Street Journal. Two things have led to the recent decline: our coronovirus outbreak and low interest rates From the Federal Reserve.
As a result, investors are selling US dollars and buying other currencies in places with lower levels of transition. While a weak US dollar can be costly when you are traveling abroad, Money againPorts This can be a good thing for your investment portfolio – here’s why.
How a weak dollar affects US stocks
As the US dollar declined, American products became less expensive overseas. This creates more competitive pricing for companies selling products elsewhere. For example, when an American company makes a $ 2 product and sells it to another country for $ 1.85, the cheaper price creates more demand.
According to Money, some of the companies that will benefit may already be part of your portfolio – such as those represented in the S&P 500. The weak dollar may have the greatest impact on US companies doing business abroad, such as those focused on technology companies, versus companies. Domestic businesses — such as utilities or telecommunications companies.