Filed under: Walt Disney (DIS), CIT Group (CIT), Federal Natl Mtge (FNM), Harrah’s Entertainment (HET), Washington Mutual (WM), Deere and Co (DE)

The markets moved significantly lower today as the dollar continued its free fall on news that China diversified its foreign currency holdings.

Over the last five years, the U.S. dollar has lost about 32% of its value compared to the euro (see chart below). What does this mean for you? Well, it means that 32% of the rise in the price of oil is due to the weak U.S. dollar. It means if you want to travel internationally, it is going to cost you about 1/3 more than it would have five years ago.

Some companies benefit from a weak U.S. dollar long term. Domestic agriculture like corn has been strong recently, and companies like Deere (NYSE: DE) that support agriculture benefit. Also, foreign tourists will find it more attractive to visit the United States as their euros will convert into more dollars. So Disney (NYSE: DIS) or Harrah’s (NYSE: HAS) Las Vegas casinos could benefit. A weak U.S. dollar helps jobs domestically, as any company that is exporting will find its goods cheaper for foreigners to buy. But all foreign goods are going to be more expensive for Americans to buy.

Continue reading Wednesday Market Rap: Weak dollar pounds U.S. stocks

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This entry was posted on Wednesday, November 7th, 2007 at 8:07 pm and is filed under Stocks Money News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.