The US dollar has dropped in value all year against a basket of other currencies.
While that may sound like a bad thing, it’s good news for anyone doing business overseas, such as Alaska seafood.
“It’s a good thing for Alaska salmon and seafood producers overall because roughly two-thirds of the value of our seafood comes from export markets. So when our currency is weaker and less valuable the prices are not has high for foreign buyers”
Andy Wink is a fisheries economist with the McDowell Group.
“It’s kind of ironic. You’d say a weak dollar sounds like a bad thing but it’s really a good thing for any industry that exports a lot of its products and competes against foreign competitors. “
A strong dollar over the past four years has made seafood more expensive to prime customers of Japan, Europe and the UK.
“Over past four years have been struggling with a stronger dollar. In 2012 to ’13 the dollar index was below 80 and even 85, and in the last two year’s it’s been closer to 100. That 15 to 20 percent swing makes our products more expensive.”
Now overseas customers will be inclined to buy more for less.
Americans aren’t so lucky – the weaker dollar makes the cost of imported goods more expensive here at home – including the 85 percent of seafood imported into the US each year.
“A lot of the seafood Americans eat is imported and so a five percent swing or whatever it is in the value of the dollar will probably make seafood more expensive. “
The dollar slump is well timed to Alaska salmon sales and Wink points out there is no lack of product.
“And also we had a good sockeye harvest and good chum harvest – I don’t know if the pinks will keep coming. If we can get a nice pink harvest, we’ve got a lot of fish to sell. “
The weakening dollar, he says, is due to uncertainties by global investment banks about the Trump administration and its ability to follow through, such as with the federal reserve raising interest rates.
“I think the way that investors perceive the health of the US economy and also the effectiveness of the administration and how are they going to do what they said they would do, such as tax reform, health care, infrastructure spending.”
Still, for Alaska salmon, the dollar losing its mojo couldn’t come at a better time –
“In the short term at least where we are now is a lot better than where we were at this time last year.”