The price of the American dollar has been the strongest in a generation, reducing global currencies and disrupting the global economic landscape while disrupting everything from the cost of a vacation abroad to profits. an international company.
How currencies have dropped against the dollar
currency and the American dollar. On the same subject : Investment in Israel High-Tech Startups Plummet by 31% in Q2.
The percentage changed on July 15
from December 31 of each country
currency and the US dollar.
The story lubricated the global economy. On the one hand, about 90 percent of all foreign trade, about $ 6 trillion in daily activity before the epidemic, comes from tourists using their credit cards to companies that are make big international money.
As the world’s most important currency, the story often rises in times of turmoil, in part because investors think it is safe and stable. The news comes in recent months that as the economy has risen, interest rates have risen and concerns have grown over growth. “It’s a very difficult mix,” said Kamakshya Trivedi, head of a market research group at Goldman Sachs.
The main way to measure the strength of the story is to refer to a purse of major trading partners such as Japan and the Eurozone. At that rate, the story is at a 20-year high, after gaining more than 10 percent this year, a big move for a brand that often fluctuates in small fractions today. each.
Source: Refinitive
The index includes the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc weighed against the US dollar.
Last week, the yen fell to a 24-year low against the dollar and the euro fell flat, a one-to-one exchange rate, with the story for the first time since 2002. But choose any currency – the Colombian peso or the Indian rupee, the Polish zloty or the South African rand – and you may have lost value in the dollar, especially in the last six months. ai.
Significant factors plaguing the global economy explain why the story is suddenly so strong.
As central banks around the world try to curb inflation by raising interest rates, the Federal Reserve is accelerating and more aggressive than most. As a result, prices in the United States are much higher than in many other major countries, enticing investors to attract higher returns on investment funds. assets such as Treasury bonds. Because money is poured in, the value of the dollar increases.
“It’s a great, powerful story,” said Mark Sobel, a former Treasury official who is now chairman of the U.S. Official Monetary and Financial Institutions Forum, the a thoughtful husband. The currency has gained momentum only three times since the 1960s.
Analysts at the Bank of America estimated that more than half of the dollar’s rise this year could be explained by the Fed only as weak policies.
Researchers called its position a haven in times of economic downturn and market turmoil. They also said the dollar has risen because high energy prices have hit the economy of foreign buyers, including much of Europe, more severely than the United States, which is less dependent on imported oil and gas.
“Not only are financial concerns growing but the U.S. is better off than the rest of the world,” said Calvin Tse, market manager at BNP Paribas.
While a strong news story can be a mixed benefit for individuals and companies, a rapid rise in the price of the world’s most used currencies could have a detrimental effect.
Americans traveling abroad this summer will find that they are spending more money. “One of the ways an American can reap the rewards of a strong record is to go on vacation,” said Max Gokhman, chief investment officer at AlphaTrAI, an asset management company. . “Even then, the fare will be more expensive because of the increase in fuel prices.”
Companies based outside the United States have seen their sales boosted by the strength of the story. Burberry, the UK’s most expensive manufacturer, said on Friday it would add more than $ 200 million to its revenue this year because of the flow of money – to help reduce the fall in sales in China, where the economy is slowing.
But American companies with large international jobs are suffering when they put foreign exports back into the news. Profits at Microsoft and Nike, for example, have been declining recently. Apple generates more than 60 percent of its sales outside the United States; he and other technologies, which control much of the stock market, are likely to suffer from the strength of the story when they reveal their latest financial results in the coming weeks.
Ben Laidler, eToro’s global market leader, estimates that the budget increase will cut 5 percent of revenue growth. the S&P 500 companies this year, about $ 100 billion. That’s a big impact because revenue at those companies is projected to grow by 10 percent this year, according to FactSet.
Reflecting the pull, companies that generate most of their revenue in the United States have outperformed competitors with a lot of international advertising, according to data compiled by S&P Dow Jones Indices.
Source: Refinitive
The records show the percentage change since Dec. 31, 2021, in the S&P 500 U.S. Revenue Exposure Index and the S&P 500 Foreign Revenue Exposure Index, which include companies with higher or lower-than-average earnings. in the U.S. or foreign countries.
Many companies and foreign governments borrow money, and financial strength is a big problem. This is especially true for poor countries that are attracted to debt more than stories to represent in the domestic development markets. As John B. Connally, a former secretary of the Treasury, pointed out to his colleagues at a conference in the early 1970s, “The story is our money, but your problem . “
Countries whose credit card debt is likely to be hit hardest a large part of their domestic product. Paying interest to creditors in the news has been particularly difficult for fast -declining countries such as Argentina and Turkey, especially as interest rates will also rise on any new debt. In some cases, including for Sri Lanka, it seems impossible.
The story, however, hasn’t whipped all the money this year. Rising energy and food prices, which accelerated after Russia’s invasion of Ukraine, have become a boon for the finances of countries such as Angola, a major oil producer; Uruguay, a major exporter; and Brazil, which sells a lot of energy and agricultural products.
The Russian ruble, perhaps surprisingly, is one of the best currencies in terms of history this year. The high prices of oil and gas, as well as the control of the capital provided by Russia to deposit money in the country, have constrained the currency exchange. How little ruble-dollar exchange ordinary Russians can do seems to be in a weak position.
The percentage changed on July 15
from December 31 of each country
currency and the US dollar.
