US dollar depreciation and stocks?

Question

as the us dollar depreciates-will this cause us listed stocks to go up in price? i do not see how

Answer 1

It depends a lot on the company and what percentage of their revenues and expenses are outside the US.

The falling dollar helps revenues and profits at companies that sell a lot outside the US for this reason: If the selling price of a product is 10 Euros and 1 US dollar = 1 Euro, the US based company gets $10 US for each one they sell. If the US dollar depreciates by 10% and it now takes $1.10 US to buy 1 Euro, then the company will get $11 US for each item they sell (without changing the price the European customer pays!)

The reverse would be true though for companies that import raw materials but then sell their product mostly in the US because the raw materials will cost them more, but unless they raise their price, they still only get the same amount of revenue, which will cut profits.

Another possible benefit to US stocks from a weak dollar is that the US stocks will be cheaper for non-US investors. At $1 US dollar = 1 Euro, a $110 stock costs 110 Euros, but at $1.10 US dollars per Euro, a $110 stock only costs 100 Euros so European investors might want to buy more...and rising demand for a stock will lift the price.

Answer 2

income perception.