October 18, 2009 by tfroberts

Everyday it seems that we hear more about the US dollar's decline. On the economic front, a weaker dollar means people in other countries can buy more of our products for the same number of pesos, pounds, euros, bhat or yen. This increases US exports and helps our balance of trade.

It also affects your investments. This article in the Financial Times Wealth magazine outlines how over the last two years (June '07 to '09) an investor using pound sterling would have gained 33.6% investing in the Brazilian Bovespa index. 3.4% of the gain was due to the Bovespa increase and 30.2% due the exchange rate change. Of course this can work in reverse.