The dollar's surge to multi-year highs against a range of currencies in recent weeks may be a good thing for controlling inflation and attracting foreign investors to the United States.
But it's bad for U.S. multinational companies. It makes their exports more expensive in foreign currency terms. And it makes their foreign-currency earnings worth less when translated into dollars. Foreign countries account for more than 45 percent of S&P 500 companies' sales.
The greenback's ascent also makes corporate borrowing and pension accounting more difficult,
The Wall Street Journal reported.
IBM and Oracle already have cited the dollar's strength as a depressant on their earnings.
"It [the dollar's increase] is going to be a big number, and it's going to put a damper on fourth-quarter earnings," Wolfgang Koester, chief executive of FiREapps, a currency advisory service, told The Journal.
The dollar touched a nine-year peak against the euro just last week.
Many experts see a currency war in the dollar's strength, as foreign nations rush to devalue their currencies. Star investor Jim Rogers is one of those experts.
"Whether it's an intentional war or an accidental war or side effect, I don't know, but it's certainly happening," he told
Wall Street Daily. "Just look around, you see that nearly every currency in the world is down a lot against the U.S. dollar, except the Chinese renminbi."
The war may not be intentional, Rogers said.
"I don't know if somebody sat around and plotted, 'Let's have a currency war.' They just said, 'What we need to do is print a lot of money,' without realizing it's going to cause currency fluctuations."
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