Nigel Green, CEO of the Devere Group, an independent financial advisory and asset management firm, issued a call for investors on Wednesday to reassess their portfolios following the U.S. dollar’s significant drop to its lowest level this year.

“The dollar’s 2.2% drop against a basket of rival currencies in August suggests a broader shift in investor sentiment as expectations of rate cuts solidify,” Green noted. This decline, fueled by speculation of multiple rate cuts by the Federal Reserve before year-end, is prompting concerns about the impact on global investments. As investors await further guidance from Federal Reserve Chair Jay Powell at the Jackson Hole symposium, Green warned:

This change should prompt investors to reassess their strategies, particularly those heavily weighted in dollar-denominated assets.

Green emphasized that the weakening dollar could create both opportunities and challenges, particularly for those managing global portfolios. “A weaker dollar traditionally boosts commodities, emerging market equities, and foreign bonds, making them more attractive to U.S. investors seeking to capitalize on favorable exchange rates,” he described.

“For global investors, this might be the time to rebalance portfolios, increasing exposure to international markets that could benefit from the greenback’s retreat,” Green advised. He also suggested that “investors can be expected to consider increasing allocations to exchange-traded funds or ETFs that stand to benefit from this trend.”

Additionally, Green highlighted the potential for diversification in commodities, saying, “Commodities like gold and oil, which are priced in dollars, often see price increases when the dollar weakens, presenting another potential avenue for diversification.” Concluding his remarks, Green observed:

The dollar’s decline suggests a shift in market dynamics that could benefit those who act strategically. Diversifying away from U.S.-centric investments and increasing exposure to assets that benefit from a weaker dollar could be a prudent move in the months ahead.

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