Decline in US Dollar

Hi Mr Tan,

I'm a regular visitor of your blog and applaud your ongoing efforts on educating people on the benefits of index/passively-managed funds and Term insurance.

I read that only USD-denominated investments primarily vested in US assets are affected by the declining USD; but the impact is less so if the investments are not in US assets. Is this true please?

Reply: Many of the US companies have global operation. When the USD declines, their income from global operations, when translated back into USD, is higher. This compensates for the decline in USD, to a certain extent.

If the company have only US operations, the decline in USD may help to make foreign imports less competitive. But, the overall impact on the US operations, due to a decline in USD, is likely to be negative.