The US dollar continues to plunge

January 16, 2018 – With the dollar sinking to its lowest level in more than ten years this past Friday, it seems that even economists are baffled.

Falling dollar

“On the up side, exports are raging along with US manufacturing. We’ve had 22 consecutive months of export growth and the overall economy has been on a surge of 103 months of growth,” said Fred Baehner, IBNewsmag publisher. “While the global economy has also been rising, the US dollar has languished.”

In fact, “the US dollar has already lost nearly 2% of its value against other currencies and is trading at its lowest level in more than three years,” according to Paul La Monica, CNN Money/Markets Now. “This follows a 10% decline for the dollar in 2017.”

“Of course, this has a boon for US exporters,” said Mr. Baehner. “Companies from Apple to Posi Lock Puller in North Dakota, have been riding the wave of export growth. ”

With the Federal Reserve raising interest rates this past year, it usually boosts the dollar’s value because they cause more foreign investors to buy American assets. and helps keep inflation in check.

“The U.S. economy has enjoyed two consecutive quarters of solid growth as well, and strong holiday sales suggest that trend continued at the end of the year,” said Mr. La Monica. “Many experts are predicting even more momentum for the economy from the recent tax cuts.

But will the dollar’s weakness actually hurt the US economy or stock market? So far that doesn’t seem to be the case. In fact, it might even help.

Trump said on several occasions in 2017 that he thought the dollar was too strong and wouldn’t mind if it lost some of its value — despite his “America First” agenda.

It’s true that a continued (and steeper) decline in the dollar could eventually become a problem. A massive dollar dump could bring about a big surge in inflation that nobody would want.

“But that scenario seems unlikely anytime soon. Despite the wackiness in Washington, most global investors still view the dollar as the world’s most stable reserve currency. The euro, China’s yuan, gold and bitcoin are unlikely to replace the greenback just yet,” Mr. La Monica concluded.

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