Weak Dollar an Economic ‘Shock Absorber’: Strategist
Is a weak dollar necessarily negative for the economy? David Gilmore, partner at Foreign Exchange Analytics, shared his insights.
The U.S. dollar recovered some of the week's losses on Friday, but had hit a 14-month low against the euro earlier this week.
Analysts attribute this to signs of global recovery driving investors to assets and currencies that promise higher returns than the low-yielding dollar.
“I’m not sure it solves problems, but it’s a shock absorber—it absorbs some of the strains on the economy,” Gilmore told CNBC.
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Gilmore said a weak dollar helps exports, earnings and multinational companies that translate their earnings overseas into dollars.
“We don’t have much inflation and a weak dollar is an import channel for inflation—it’s putting an upward pressure on commodity prices, so there’s a bit of a tax there,” he said. “But on balance, it’s what the doctor ordered.”
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No immediate information was available for Gilmore or his firm.