Questions, strong dollar or weak dollar ?

[frayne]

I understand that having a weak dollar encourages foriegn investment and cheaper exports and a strong dollar allows us to buy foreign goods at cheaper prices. What is the ideal situation, and why.

Also what is the foreign exposure on a percentage basis of the S&P 500 companies ?

 

[unclemick]

? Which decade? The number 40%(speaking gross handgrenade wise) sticks in my mind.

Absolutely no idea what the current number - of foreign $ sales or earnings is in todays valuations.

Two thoughts - it's maybe higher than you think and has perhaps varied widely since I started investing(1966).

heh heh heh heh - We did go to Europe in 1985(a high $ point) and Germany, Sweden and Finland were still expensive relative to say er Texas. .

 

[NinjaPigeon]

I'm by no means smart enough to answer this with any strong conviction, but I should think that if we drop too far in value, OPEC might switch off the dollar. We already know Venezuela and Iran are open to it. And it cuts into OPECs profit.

 

[dex]

I'm by no means smart enough to answer this with any strong conviction, but I should think that if we drop too far in value, OPEC might switch off the dollar. We already know Venezuela and Iran are open to it. And it cuts into OPECs profit.

One great fear of mine is high inflation in the future. With the debt load the USA it wouldn't take much:
Oil seller use a basket of currencies to price oil
Foreign nations dump US debt instruments
Steep decline in the US $ exchange rate

I think it will be telling to see what happens when the Fed begins to lower interest rates.
I'm holding the Australian $ and Euro.

 

[Milton]

I think it will be telling to see what happens when the Fed begins to lower interest rates.
I'm holding the Australian $ and Euro.

Very prudent.

 

[barbarus]

I think I've posted this before, but it's germane to this thread too.

INO - U.S $ INDEX (NYBOTX) Price Chart and Quote

 

[kumquat]

It depends.

I'm Canadian and our $ has gone from US$.60 to par in the last few years. Things manufactured in the US still cost the same. Try pricing a new car at Ford Motor Company: Cars, Trucks, SUVs, Hybrids, Parts - Ford (US$) and Ford Motor Company of Canada, Limited (C$), or look at a magazine (US$2.50, C$3.50). Exchange rates are meaningless untill retailers recognize them. So, what will happen to recognize parity, will US prices rise or Canadian fall? If I were American, I'd buy a whack of stuff before others want full value for their currency.

 

[youbet]

So, what will happen to recognize parity, will US prices rise or Canadian fall?

I'm wondering that myself. I can't think of very many examples of merchandise our household buys that are manufactured in Canada. But, I do travel to northern Ontario every year to chase walleyes around Gull Rock Lake, near Red Lake, Ontario.

The folks that own the lodge where we stay charge in USA dollars since almost all the guests are American. Prices have been increasing fairly rapidly the past few years, explained by the owner as being due to exchange rates. We like it up there very, very much. But it's getting very, very pricey.

It's not hard to imagine American tourism up there dropping off significantly. And I expect Canadian tourism down here to pick up. Not what I wanted to see in retirement: my favorite haunts "up nort" too expensive to visit regulary and my favorite haunts down here crowded with bargain seekers.

Northern Minnesota, northern Wisconsin, the UP of Michigan........all starting to look good!