NEW YORK -- The dollar isn't winning many battles against foreign currencies lately.
The American greenback has fallen sharply since March 1 and earlier this week dropped to a 14-month low compared to the euro. While it recovered somewhat on Friday, the dollar has for the most part taken a beating.
That's bad news for travelers, oil prices and perhaps the economy in general.
But it's a bonanza for U.S. companies that sell a lot of goods overseas. A cheaper dollar makes U.S. goods less expensive abroad. That means big-name companies like Caterpillar, General Electric and IBM can undercut competitors in foreign markets and still make money.
"This could be a great benefit to U.S companies," said Bernard Baumohl, chief global economist at The Economic Outlook Group.
Investors agree. Stocks of major U.S. exporters have shot up in recent months. Shares of Caterpillar, for example, have risen 169 percent since March. General Electric's stock increased 105 percent in the same period.
Analysts say the appeal is understandable.
Caterpillar's outlook
Caterpillar, which employs about 1,800 people at plants in Cary, Sanford and Clayton, generates more than 65 percent of its revenue internationally. A weaker dollar drives down the price of its mining and construction equipment in high-growth markets such as China and India, leading to the potential for increased sales, said Adam Fleck, an equity analyst for Morningstar. It also gives the company a leg up on Japanese rival Komatsu.
For GE, the story is similar. The company can sell products such as wind turbines in emerging markets at more competitive prices, broadening its appeal with customers. GE has an aviation plant in Durham where jet engines are made and repaired.
And for technology companies such as IBM, which derives more than 60 percent of its revenue outside the United States, a weaker dollar could pump up sales. IBM, which employs more than 10,000 at its campus in Research Triangle Park, has seen its stock rise 38 percent since March 1.
David Huether, chief economist of the National Association of Manufacturers, said the weak dollar could provide a boost to the U.S. manufacturing industry by promoting its products overseas.
"It's going to be a vital ingredient for the manufacturing recovery," he said.
Can Boeing capitalize?
Still, some analysts question whether all companies will benefit heavily from the dollar's descent.
Commercial aircraft maker Boeing, for instance, may become slightly more attractive, but it likely won't win any major new aircraft orders because of the dollar, said Howard A. Rubel, aerospace analyst at Jeffries & Co.
To do that, air travel demand needs to improve, Rubel said: "Currency may help on the margins modestly. But in the end, the reality is: Show me economic activity, and I'll show you increased demand for aircraft."
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The value of the dollar has varied since last fall, when it spiked following the collapse of the investment bank Lehman Brothers as investors rushed into safe-haven assets.
This week, it dropped to a 14-month low against the euro as strong earnings from some U.S. drug, technology and manufacturing companies spurred investors to sell the low-yielding "safe" dollar and buy riskier currencies that give higher returns.
On Friday, it recovered somewhat after a pullback in U.S. equity markets spurred some greenback buying. When the Dow industrials drop, that can help the dollar.
An increase in U.S. interest rates also makes the dollar more appealing to traders, because it causes the assets priced in dollars to have higher returns. But most economists don't expect the Fed to start raising rates until next year, probably in midsummer or early fall.
The Associated Press
