The Risks of Dollar Strength

History teaches that a reinvigorated US dollar exposes those whose balance sheets were built on the belief that cheap money would last forever

Liontrust Asset Management 18 February, 2015 | 3:17PM
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Morningstar's "Perspectives" series features investment insights from selected third-party contributors. Here, Felix Martin, an economist at Liontrust Asset Management discusses the threat of a strengthening dollar on investors’ portfolios.

The US – finally – is back. Strong growth, falling unemployment, rising confidence and a buoyant stock market all say so. The rest of the world, meanwhile, seems stuck in the doldrums. 

Should this divergent dynamic concern investors? In principle, no: robust performance from the world’s largest economy should be unequivocal good news. In practice, however, the consequences of global de-synchronisation can be painful. The problem is the price of the dollar – because it is the currency not just of America, but of the world. 

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About Author

Liontrust Asset Management  provides investment services and asset portfolio management in UK, European, Asian and Global equities, Global credit and Multi-Asset

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