Report: US dollar has worst half-year since the 70s
'A depreciation in the US dollar is inflationary ,' Ryan Sweet, the chief US economist for Oxford Economics, told Newsweek . 'The depreciation in the dollar increases the risks that tariffs boost consumer prices more than anticipated this summer and into the fall.'
Take, for example, the cost of car parts from best-selling Japanese brands like Toyota, Honda, and Nissan. When the dollar weakens against the Japanese Yen, it takes more dollars to buy the same part from an overseas supplier.
That can push up Americans' repair bills, parts prices, and insurance. It also increases manufacturing costs in the US, where many factories depend on globally sourced components. Similar price pressures are showing up in other industries that rely on imports — like food, electronics, and clothing.
Coffee from Colombia, apparel from Vietnam, and even roses from Ecuador — all products that have nearly no US manufacturing — can become more expensive and trickle down to consumers at the checkout line. Bret Kenwell, US investment analyst at eToro, told DailyMail.com there is a mix of good and bad with the dollar's dip.
'A falling dollar can be a good thing for large multinational companies, as it boosts their earnings in non-dollar currencies,' he said. 'However, importers can struggle as it now takes more dollars to buy the same goods as before. For these reasons, many companies look to hedge their currency exposure — especially in volatile environments.'
More than a quarter are pulling back from US stocks and shifting into gold and cryptocurrency — two assets often viewed as hedges against inflation and currency risk. Younger investors were especially bullish on gold, the survey found. Trust in the US market is also starting to slip from all-time highs. The dollar has traditionally been seen as safe haven currency for international investors.
But rising national debt, increased inflation, higher interest rates , a wobbly political landscape, and a focus on US manufacturing has chipped away at its long-term dominance. Some creditors are even worried the US might not be able to service some of its debts. But top White House advisors say the dollar's long-term strength has come with tradeoffs for US jobs.
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