While the US dollar is far from being out of favor, it isn’t the reigning king of currency anymore. CNN Money reports that the dollar has fallen 15% against the Euro since March and will continue to fall in the first quarter at an estimated 10%. Since there’s nothing to guarantee the value of the dollar and the values surrounding it are declining, it only makes since that it’s falling.
Now that the finance world has gone global, there’s simply greener pastures on the horizon. Various countries are opting for various international currencies like the Chinese yuan, Russian ruble, Japanese yen, Canadian dollar, Latin American currencies, and the list goes on. CNN Money also reports that a decade ago, the dollar made up an estimated 54% of the world’s stock market value. It’s currently down to an estimated 33%. The dollar will have to compete or get out of the way.
Creating a Defense Plan
The best thing is that Americans have the ability to diversify and fight back. They don’t have to be locked into the fate of the dollar. It’s best to hedge these losses by diversifying your portfolio from 25-50% with foreign investments. Another advantageous move would be investing in American export companies that stand to gain from the lowered dollar prices. With these moves, you’ll stand to be less affected by the fate of the dollar.
*Image courtesy of Duncan Smith.
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