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.

Upside of a Down Dollar
Upside of a Down Dollar

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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Disclosures:

No immediate information was available for Gilmore or his firm.

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