The Dollar Looks Like a Wrecking Ball to Some Investors
There is no doubt that the dollar has had a remarkable decade, surpassing other important currencies.
In this way, Morgan Stanley, Brandywine warn that it is already causing economic damage.
Certainly, US President Donald Trump makes the headlines, but he is not the only one worried that the remarkable rise of the dollar is causing economic damage. Since in fact, some even fear that it may trigger a recession.
Thus, it has been emphasized that it is difficult to characterize the ascent as more than historical. A long-term indicator of dollar performance dating back to the late 1960s is having its best recorded decade, emerging from the rubble of the financial crisis with a 25% increase since the end of 2009.
It should be noted that another Bloomberg index hit bottom. And it is that a few weeks before the United States lost its AAA rating of S&P in 2011, only to jump 32% since then since the dollar defeated all other currencies of the Group of 10 along the way.
Even so, it has been said that what is good for bulls in dollars is bad for many others. In this way, the increase tends to erode the profits of US multinationals that help boost the world’s largest economy, and also increases costs for foreign corporations that have billions of dollar-denominated debt. All this is especially problematic today in which we live, amid growing signs that the global economy is reeling on the verge of a recession.
An example of the situation could be Coca-Cola Co. which is among those who feel pain, to name a prominent example. The Atlanta-based beverage giant recently noticed the wind against the strong dollar, although he hopes this will be eased soon.
Okay, not everyone sees the dollar as a recessive trigger: Bank of America global economist Aditya Bhave says that the US economy does not depend too much on exports to grow.
Source: Vivien Lou Chen | Bloomberg