Omega Management logo

Why A Strong Dollar Is Not As Good As You Think

A strong dollar sounds great. Here is where it is not so great for U.S. companies and investors.


To most people, a strong currency means a strong country. Weak countries have weak currencies. Strong dollar…U.S. strong like bull.

But that’s Tarzan-level thinking. The leading proponents of a strong dollar are the big investment firms of Wall Street who work as asset managers or broker/dealers for foreigners. A strong dollar means more investors are buying U.S.-denominated securities – namely Treasury bonds or plain old cash.

In that sense, a strong dollar leads to the hyper-financialization of the U.S. economy. It is best to call it an overvalued dollar, as the dollar will always be strong even if the dollar index is trading slightly under 100.

When financial securities become the only business in town, it becomes a detriment to most other sectors of the economy. This is especially true for exporters and manufacturers…

Read more…