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Main » 2018 » October » 31 » Strong greenbacks growth could harm US companies
Strong greenbacks growth could harm US companies


Now major media attention focused on the trade disputes between the US and China, while at the same time, many do not see the risks associated with the continued strengthening of the US currency. But the dollar growth of quotations can cause much damage to US corporations palpable than a trade war with China. 

At the moment, the US dollar index is headed for the 52-week high, showing a 5 percent annual growth rate. This indicator is measured by the ratio of the US dollar price against the cost of major world currencies - the euro, yen, British pound.





What is the cause of such a strengthening of the dollar? Against the backdrop of the growth rate of other world economies, the US economy is on the rise. At the same time the Fed constantly raises interest rates, thereby strengthening US dollar quotes. 

US dollar's rise reduces the profits of corporations that do business in other countries. At the same time, the growing purchasing power of US citizens in relation to other countries, because now a dollar can buy more abroad. So, American consumers are now less will purchase domestic goods, as cheaper to buy cheaper imported goods. 

A number of major US corporations, such as Hasbro, Harley-Davidson, Kimberly- Clark, 3M, Caterpillar and owner of Gillette - Procter & Gamble has already said about this issue.

Hasbro (HAS) also says that the quarterly sales growth demonstrates the severe recession, the high cost of the dollar against the euro and the currencies of Latin America and Asia is detrimental to the company. 

Known worldwide Harley-Davidson Company also announces the fall of sales of more than 1%. For this company the damage does not as strong dollar, as a rise in metal prices associated with an increase in import tariffs and retaliatory duties imposed in response to the actions of the administration Trump. 

It seems that the majority of American corporations were not prepared for the negatives, which entails a constant dollar growth.


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