Connect with us


Finance: Strong dollars for investors



PHUKET: One of the biggest and most unappreciated risks faced by global investors this year is the continued strength of the United States dollar holding back key investing asset classes.

After all, a strong dollar tends to be a double-edged sword.


As foreign currencies weaken against the dollar, US stocks that are large cap multinational corporation doing either global business (Coca-Cola, McDonald’s, Procter & Gamble) or who tend to focus on exporting (Caterpillar) will likely report lower sales and profits when their earnings abroad are converted back into dollars.

Many US companies have been caught off guard and unhinged by the dollar’s rapid rise.


As the dollar rises, dollar denominated commodities such as oil tend to become cheaper.

While cheaper gas prices are great for consumers and commodity importing countries, it’s not good for commodity stocks with expensive equipment, large payrolls and debt to service.

The same can be said for commodity dependent or driven economies like those of Australia, Chile, Russia and South Africa, whose economies slow.


Any emerging market country that has its currency pegged to the dollar will likely see their
exports fall and GDP growth affected.

Many emerging market companies and countries alike also binged on US-denominated debt in the years after the 2008 financial crisis, with some countries feeling extra pain with the potential of going into default.


In theory, a strong dollar should not be bad for China, as the US is the country’s biggest trading partner and the Renmibi is sort of pegged to the dollar.

In practice, a strong dollars harms China’s exports to other countries and could force the government to do more structural reforms, do more expensive stimulus or do a controlled depreciation of the Renmibi.


Although the EU continues to have its share of largely unresolved problems, the weaker Euro will help European exporters as well as give a boost to the region’s tourism.

European companies tend to be more globalized and should see revenue and profit increases at the expense of their American counterparts.


Assuming the overall US economy does not begin to slow, stocks that do most of their business in the US (usually mid caps or small caps) or are importing either raw materials or finished goods, should fare well. However, certain US stocks with their operations concentrated in shale oil regions (e.g. restaurant or retail chains) or who depend upon foreign tourists (e.g. certain luxury retailers, hotel groups) could be adversely affected by the dollar’s rise.


While commodity exporters are hurt by a strong dollar, Asian countries that are commodity importers and/or exporters of manufactured goods should see some positive economic benefits.

In addition, some of the sectors or areas mentioned earlier (e.g. commodities, certain emerging markets) may be or could get beaten down by a strong dollar that now, or in the near future, might be an attractive entry point for investors who can stomach some risk and have a long-term time

Most other investors would be wise to keep an extra portion of their equity allocation in US domiciled stocks while paying attention to where these stocks conduct most of their business. Investors also need to be mindful that US interest rates could start to rise in the near future, but this should further support US-based investments.

It’s still very difficult to predict where the dollar will be at the end of the year – let alone five years down the road. And while its important to consider how a strong dollar will impact investments in the short term, investors should not let potentially short-term currency fluctuations determine their long-term portfolio allocation.

Don Freeman, BSME is president of Freeman Capital Management, a Registered Investment Advisor with the US Securities Exchange Commission (SEC), based in Phuket. He has over 15 years experience working with expatriates, specializing in portfolio management, US tax preparation, financial planning and UK pension transfers. Don can be reached by calling 089-970-5795 or sending an email to:

— Don Freeman


Get more from The Thaiger

Join the conversation and have your say on Thailand news published on The Thaiger.

Thaiger Talk is our new Thaiger Community where you can join the discussion on everything happening in Thailand right now.

Please note that articles are not posted to the forum instantly and can take up to 20 min before being visible. Click for more information and the Thaiger Talk Guidelines.

Archiving articles from the Phuket Gazette circa 1998 - 2017. View the Phuket Gazette online archive and Digital Gazette PDF Prints.

Follow Thaiger by email:

Road deaths9 hours ago

Dead woman in car pulled out of Kanchana Buri canal

World10 hours ago

As Iran revolts, president vows to deal with protests

Election10 hours ago

POLL: Top 2 picks for prime minister are “nobody” and Ex-PM’s daughter

China11 hours ago

No word from China on Xi military coup whispers

Pattaya11 hours ago

Intoxicated Pattaya tourist allegedly punches elderly Australian man in face

Thailand12 hours ago

Thai TikTok star detained at Singapore airport over huge amount of cash

Join the conversation on the Thaiger Talk forums today!
Kanchanaburi13 hours ago

Kanchanaburi school director found dead in canal

Pattaya14 hours ago

Small children in Pattaya learn to get help when locked in hot cars

Chiang Mai15 hours ago

Heavy rains collapse part of Chiang Mai’s ancient city wall

Events15 hours ago

6-hour whiskey drinking contest draws criticism

Pattaya16 hours ago

Pattaya official urges mayor to expand legal nightlife zone

Thailand17 hours ago

Things you can do in Thailand during the rainy season

Indonesia17 hours ago

Earthquake in Indonesia felt throughout southern Thailand

Patong18 hours ago

Foreign women rescued from rip current in Patong

Thailand1 day ago

Woman smashes up her 1.5 million baht car over feud with Ford Thailand

Thailand1 year ago

Morning Top Stories Thailand | Police to end protests, Human Trafficking | September 14

Thailand2 years ago

Thailand News Today | Thai Airways in rehab, All go for Songkran | March 4

Tourism2 years ago

Phuket’s nightlife. Yes, bars and clubs are still open | VIDEO

Phuket2 years ago

Thailand News Today | Covid passport talks, Thai Airways heads to court | March 2

Tourism2 years ago

Phuket Thai food treats you need to try | VIDEO

Thailand2 years ago

Thailand News Today | Bars, pubs and restaurants ‘sort of’ back to normal | Feb 23

Tourism2 years ago

In search of Cat & Dog Cafés in Phuket Town | VIDEO

Thailand2 years ago

Thailand News Today | Gambling crackdown, Seafood market to reopen, Vlogger challenge | Jan 21

Thailand2 years ago

Thailand News Today | Covid testing for visas, Business impact, Vaccine approval | January 19

Thailand2 years ago

Thailand News Today | Weekend Bangkok bombs, Thailand fires, Covid update | January 18

Thailand2 years ago

Thailand News Today | Stray car on runway, Indonesian quake, 300 baht tourist fee | January 15

Thailand2 years ago

Thailand News Today | Governor off respirator, sex-trafficking arrest, condo prices falling | January 14

Thailand2 years ago

Thailand News Today | Chinese vaccine, Thailand ‘drug hub’, Covid update | January 13

Thailand2 years ago

Thailand News Today | Bangkok may ease restrictions, Phuket bar curfew, Vaccine roll out | January 12

Thailand2 years ago

Thailand News Today | Covid latest, Cockfights closed down, Bryde’s Whale beached | January 11