by Marc Chandler
Financial Sense
The US dollar has had a rough few months. It has fallen against most major and emerging market currencies this year. A critical issue for global investors and policymakers is whether the dollar’s uptrend is over, or is this just a respite. Much is at stake with the answer.
The variability of exchange rates could account for a third of the total return of a basket of international equities and twice as much for a basket of foreign bonds. Since many commodities are priced in US dollars, the greenback’s direction tends to influence their dollar price. Many emerging market countries and companies have borrowed dollars, and an appreciating dollar, exposes a potentially painful currency mismatch.