What to watch

What sinking dollar means for your portfolio

The U.S. dollar is on the decline and trading near its lowest level since last August against foreign currencies, a shift in fortunes for the greenback that bears watching by investors.

A broad U.S. dollar index (DXY) fell as low as 94.48 Tuesday, near its 52-week low of 94.08 on Aug. 18, 2016. The catalyst for the dollar’s declining value was Republicans’ admission that it did not have enough votes to pass its bill to replace Obamacare.

That news was viewed negatively by currency traders as it was the latest failure of the Trump administration to get key legislation passed and reinforced fears the president’s plan to boost the economy with tax cuts and infrastructure spending “is in jeopardy,” says Joe Quinlan, chief market strategist at U.S. Trust.

The inability of Trump to pass legislation means expectations for U.S. growth must come down, which hurts the dollar, says Axel Merk, chief investment officer at Merk Funds.

But a weaker dollar isn’t all bad for U.S. investors.

“There is a silver lining,” Quinlan says. He notes that a sinking dollar will boost sales and profits of big U.S. exporters that sell products abroad as their goods will be cheaper when purchased with stronger foreign currencies.

A weaker dollar also is a plus for economies in emerging markets, which will provide a lift to global growth, adds Don Rismiller, analyst at Strategas Research Partners, a Wall Street research firm.