Does the weak U.S. dollar present a major headache for global equity markets?
Overall, it could be a mixed blessing for global markets. A weak dollar hinders overseas companies which do most of their business in the U.S. Yet there are many opportunities in foreign companies with limited exposure to the dollar. Examples include companies providing local services or products, as well as international companies which hedge their currency exposure, have dollar-denominated debt, or are naturally hedged by having facilities in America, such as BMW and Toyota. Q: How are things looking in Western Europe? A: European interest rates have followed U.S. rates to near historic lows. The euro has strengthened significantly vs. the dollar, which will lead to translation and transaction risk for exporters and companies that do business in the U.S. But a U.S. economic recovery should spill over into Western Europe. Our fund has about 53% of assets in Western Europe at present.
