#178. Are we near the end of the Dollar Down Cycle?

The argument that the declining US dollar implies the end of US leadership in the global economy is flawed. The US dollar’s slide is by no means unprecedented. The US currency has gone through periods of strength followed by periods of weakness throughout history.

In the past, cycles of dollar strength and weakness have lasted between seven and ten years. We are already six years into the current down cycle which began in February 2002. If we repeat the pattern of the early 1990s, following the last housing bust, the dollar may stabilize in the next year or so, but a meaningful recovery in its value could be a couple years off.

Despite what many TV commentators might like to scare everyone with a “the sky is falling” tactic, companies that are exporters are enjoying the low dollar. Examples are agricultural products, machinery producers and others.