Declining Dollar is an Investment Opportunity

"We believe that the dollar's decline versus the euro has further to run, with $1.38 a possible destination for the pair over the next six months."
Tom Levinson, a foreign exchange strategist with ING London Banking

One trend you can count on this year is the decline of the dollar against most developed country currencies. Even OPEC is now pricing oil contracts in euros. The U.S. dollar has been the reserve currency of the world for many years. In other words, it has been the default currency used in many international transactions. Our economy has benefited from reserve currency status but we have abused that privilege. The U.S. government has accumulated huge fiscal deficit and our economy has amassed an enormous trading deficit. These twin debts have jeopardizing the value of our currency.

The least risky and inexpensive way to take advantage of this play is to invest in unhedged international stock and bond funds.

I’ll be adding to my client’s positions in the institutional shares of PIMCO Unhedged Foreign Bond Fund. All the international stock funds I use are unhedged.

Libby Mihalka
The Financial Pragmatist