- November 29, 2022
- Posted by: Stratford Team
- Category: Economy
Steve Caruthers & Steven Sperry (Capital Group) | There’s no denying that the relentless rise of the U.S. dollar has been challenging for investors in non-U.S. equities. The currency translation effect (that is, losses and gains resulting from the conversion of non-U.S. investment returns into U.S. dollars) has dented global equity portfolio results.
There are two ways currency movements can affect investors. In addition to translation effects at the portfolio level, companies within a portfolio may experience business impacts. However, a strong dollar is not always bad news for non-U.S. companies.
Specific companies with solid fundamentals can disproportionately benefit from foreign exchange swings. Exchange-rate volatility can have a big impact on corporate profitability, depending on where a company generates revenue or incurs costs. Companies with significant costs in euros or yen and a lot of revenue in U.S. dollars, for example, could…
