Jakarta, Armfalcon.com – The issue of de-dollarization which is increasingly rife causing the United States (US) dollar to weaken will certainly have an impact on several investment assets that are on the market and that you can buy.
Countries in the world have often taken the issue of de-dollarization quite seriously since the war between Russia and Ukraine, which caused soaring inflation that eventually forced the central banks of countries to raise their benchmark interest rates. As a result, Uncle Sam’s dollar rose significantly.
De-dollarization is actually expected to reduce dependence on the US dollar. However, behind all this there will be an effect that is considered quite positive to the several assets below.
Curious about what investment instruments are expected to experience positive performance when the US dollar weakens? Here’s the review.
There are many factors that cause the price of gold to rise and fall, but the price of gold is often said to have a negative correlation with the US dollar. If the US Dollar strengthens, the price of gold falls, and vice versa.
In fact, world gold is traded in US dollars. Therefore when the US Dollar decreases, the interest in buying gold will increase and that is what ultimately causes an increase in world gold prices.
The rising world gold price will certainly raise the price of gold bars such as Antam, gold at Pawnshops, and other producers in Indonesia.
Index Funds and ETFs with this underlying asset
A weaker US dollar makes the currencies of a number of countries strengthen. This certainly can affect the behavior of foreign investors who want to place their funds in developing countries that have positive economic growth prospects.
Several reference indices such as the MSCI are inhabited by stocks with high liquidity and are of interest to foreign investors.
The MSCI Index is published by Morgan Stanley Capital International to measure market performance in certain areas defined according to MSCI calculation standards.
When the prices of stocks included in this index increase, then mutual funds and ETFs with MSCI index-based assets will also record positive performance.
Shares of issuers like this…
If an index mutual fund is intended for investors with a less aggressive risk profile, aggressive investors can immediately choose stocks as their investment. But what kind of issuers will benefit when the US Dollar weakens?
Issuers that have debt denominated in US dollars may benefit from the difference in exchange rates because the US dollar is experiencing a decline.
In addition, issuers that often import raw materials from abroad will also benefit from reduced import costs from the period when the US dollar was still expensive. Likewise with issuers that have the largest market share in the country.
Managed Funds Dropped, Are Mutual Funds Still Good?