The dollar is dropping at an astonishing rate. In November, the dollar lost 1.9% of its value. With the economic crisis raging on, many people are starting to wonder if the dollar will recover. What should investors look at when facing the dropping dollar?
The key to any investment is to properly hedge against sudden decreases in value. An investor shouldn't have his or her eggs all in one basket. While the greenback has always been the currency of choice, other foreign currencies are rallying despite the drop in the dollar.
The Australian dollar usually goes up when oil goes up, as gold is the country's 3rd largest export. Other currencies such as the New Zealand dollar seem to be stable despite fluctuating dollar values.
What does the falling dollar mean for the US? It's a double edged sword, really. As dollar values decline, our exports become more attractive to foreign investors. However, the US has increasingly relied on foreign sources of goods. Buying imported goods has become higher.
Americans are finding that their dollars aren't buying as much as it used to. This will happen until the decline stops. Hopefully the dollar will rebound soon.
Written by Meg Cook
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