Report: Dollar Decline Harms American Tourists but Benefits Foreign Stock Investors

SadaNews Economy Translation - Americans are facing a different financial reality this summer as the value of the dollar deteriorates, which has been a symbol of purchasing power abroad for decades. The ICE Dollar Index recorded its worst first half performance in fifty years, dropping by 11% against the euro and 6% against the Japanese yen, leading to fluctuations in the tourism and investment sectors.

The Dollar is No Longer the Preferred Travel Companion

The conditions that supported the recovery of American tourism in 2024 have changed, after the trade policies of former President Donald Trump's administration began to impact market confidence, amid growing concerns over national debt and the widening gap in interest rates between the United States and other major economies. Despite rising travel costs, a quarter of Americans still plan to take an overseas vacation this summer according to the latest Deloitte survey.

Positive Impact on Multinational Companies

Experts believe that the decline of the dollar could provide a new lifeline for American multinational companies, especially those dependent on global sales. As the earnings season begins, analysts expect a rebound in the profits of companies listed on the S&P 500 Index, which derive more than 40% of their revenues from abroad. Lori Heinly from State Street says, "Certainly exporters will benefit from this decline."

New Opportunities in Global Markets

On the investment front, the appeal of foreign stocks among American investors has increased, as the weakness of the dollar has boosted their returns due to currency gains. The MSCI Global Index (excluding the United States) achieved a return of 19% in dollar terms by July 3, while the Vanguard International Fund rose by 17%, significantly outperforming the S&P 500 Index.

Calls for Investment Diversification

David Kelly from JP Morgan indicates that now is the right time to diversify investment portfolios away from the U.S. market, especially as many investors have been overly focused on local stocks without rebalancing for years.