dollar boosts tech revenue by 4.2%
From a two-decade high in September to its lowest level since April, the US dollar has lost about 11% against a basket of major currencies.
This trend will boost earnings for companies that earn a large portion of their revenue outside of the United States because a weaker dollar means that foreign earnings are translated into more dollars.
IBM and ServiceNow noted positive trends in the foreign exchange market.
Last year, the dollar index gained the most since 2015 as a result of the Federal Reserve’s interest rate hike to combat inflation.
Since the dollar index peaked in September, the Nasdaq 100 tech index has gained 6.9% and has risen for four weeks in a row since early 2023.
“Everyone sees a weaker dollar as a tailwind, but what everyone really thinks about is demand,” Stifel Nicolaus & Co. chief investment officer Michael O’Keeffe said.