For a U.S. investor, a currency gain or loss stems from a fall or rise in the value of the dollar against the currency in which the investment is made. Fluctuations in the dollar’s value are inevitable. Here’s how to manage your day-to-day finances and your portfolio through those blips. You may have heard news reports about the decline or strength of the U.S. dollar. Your reaction? Likely a yawn. But the truth is that the value of the dollar has ripple effects throughout the economy, ultimately affecting your day-to-day finances as well as your investments. Making Sense of the Exchange Rate What does it mean when the value of the U.S. dollar has declined or increased? In plain English, it refers to the amount of money you get when you exchange a dollar for another country’s currency. When the dollar rises, you get more bang for your buck. When it declines, the opposite occurs. If you have traveled abroad, you’ve experienced the effect firsthand. If the dollar is weak vis-à-vis other currencies, it costs you more when visiting another country because you won’t receive as much of the foreign currency when you exchange your dollars. Here at home, the relative strength or weakness of the U.S. dollar affects you both in the interest rate you are charged for loans and in everyday purchases. Think about the car you drive, the clothes you wear, your cell phone, or computer. Chances are many of these items are produced and imported from abroad. So the price you pay for these goods is going to depend on the value of the dollar. When the dollar is strong, prices of consumer goods tend to be stable and/or increase more slowly. When the dollar is weak, prices may increase. Higher consumer prices also can lead to…