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What could a long-term weaker dollar mean for the world?

[Music]

the dollars fall has been one of the

main market stories of 2018 it is the

scale of the decline that initially

caught investors off-guard dropping by

4% against the euro although it's big

recovery in the second quarter of the

year has equally taken the market by

surprise even so market commentators are

talking about this being a downward

phase long term for the greenback a weak

dollar should prove beneficial to

American companies that sell goods

abroad while US stocks in general should

look attractive to overseas investors

dollar weakness was helping commodities

which are priced in dollars and it was

helping to tame inflation in emerging

markets and make their assets a better

opportunity for investors but given the

dollars recent rally how sure can

investors be about these long-term

outcomes well that depends on the

reasons for the dollars decline if it

returns to a downward trend and does so

because of rising global growth and

expectations of monetary tightening in

Europe and Japan then that is a

favorable climate for investors but if

it falls because of u.s. protectionist

rhetoric and trade tariffs then that

could stifle world trade and if it is to

do with the u.s. twin deficit then that

could have waken worries about the US

economy for the time being the US

economy is powering along making the

Federal Reserve inclined to raise rates

indeed investors could be excused for

wondering whether the dollar continues

to rally

despite the dollars volatility in 2018

the chances are that the greenback will

be ending the year weaker than it began

dollar bear markets over the last 45

years tend to go on for about seven

years so based on the law of averages

there would be some way to go