BY Money Morning

Let me put it bluntly: The U.S. dollar is nose-diving against foreign currencies. So far, it’s down 12% against the euro, 7% to the yen, 8% to the pound, 15% to the Canadian dollar, and 10% to the Swiss frank. And that’s just in the past year alone.

And the effects are far-reaching, tugging at the standard of living Americans have grown accustomed to - far beyond the expense of a European vacation.

What’s happening? Here’s a list:

Domestic prices are up across the board because imports now cost more with a devalued dollar. Less purchasing power here means international companies will offer American consumers fewer products.

The United States is losing its grip on the overall world economy. At present rates, China will have a larger economy than the U.S. in 2050. A tanking dollar also weakens the United States’ strength in international relations, as it hopelessly tries to negotiate with strong-currency countries and economies.

With move the dollar makes to the downside, tens of thousands of dollars are bled from your retirement savings. That "Magic Number" that retirees are planning on is getting higher by the day, mainly because of the rising cost of imports - namely oil and other commodities. This is driving up the overall cost of living. As a result, the amount you planned to retire on could already be too low by future standards, forcing you to work longer or lower your standard of living.

Thankfully, there are simple solutions to these currency conundrums.

By holding assets denominated in foreign currencies, U.S. investors can protect their savings from the twin assaults of inflation and currency devaluation. In dollar terms, the value of assets held outside the United States will grow in a gratifying fashion - as will the profits you reap from these strategies.That is the crux of this report - how you can protect your assets against a declining dollar, and how you can actually profit from the increasing value of many foreign currencies. Here’s what you need to know…

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