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The strongest dollar in 20 years is wiping billions off U.S. company earnings. Here’s why

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26.07.2022

The value of the U.S. dollar is the strongest it’s been in a generation, which means Americans planning vacations to Europe or wiring cash to family in Latin America are not upset. However, if you happen to be a U.S. company that earns a decent percentage of your profits abroad, this climb to unseen heights unfortunately isn’t great news for your bottom line.

The dollar is having a record run for 2022. It’s up roughly 15% against the euro (hitting 1-to-1 parity for the first time since 2002), 15% against the Japanese yen, 10% against the British pound, and 5% against the Chinese renminbi. The Economist‘s annual Big Mac Index just dropped last week, and this year the magazine noted, “Nearly all currencies are undervalued against the dollar.”

It’s normal for the dollar to rise in uncertain times. Investors historically believe it to be the safest, most stable currency, plus the Federal Reserve’s interest rate........

© Fast Company


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