Q&A: Money Market fund – what would happen to a MM fund if the US Dollar were devalued greatly?

Question by DF: Money Market fund – what would happen to a MM fund if the US Dollar were devalued greatly?
Would it stay about the same because the fund manager would have moved into other currencies as the US dollar devalued?

If the US dollar were to plummet in value, a recession would be likely – what has happened to Money Market funds during serious recessions?

Best answer:

Answer by Jerry
A US money market fund is invested in US dollar denominated securities. It would likely still have the same nominal dollar value. However, the purchasing power would be greatly diminished as all imported goods would be far more expensive.

In most cases, the investment guidelines prevent the fund manager from moving to other currencies.

Your scenario is a great argument for international diversification.

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