Dollar bulls see Donald Trump’s plan to repatriate as much as $2.6 trillion in corporate profits stashed overseas as a can’t-miss boon for the greenback. The problem is most of that hoard may already be held in the U.S. currency.

Traders pushed the dollar up by the most in five years last week, partly in a wager that the president-elect’s tax-amnesty proposals will fuel a surge in greenback demand.

Yet at Apple Inc., with the most overseas cash among S&P 500 members, more than 90% of its $216 billion stash is in the U.S. currency, according to former employees who had direct knowledge of the matter and asked not to be identified. For Microsoft Corp., the second-largest holder of cash abroad, dollar-denominated bonds alone make up 66% of total cash, securities filing shows. The data suggest that even if Trump is able to follow through with a tax amnesty similar to the one-time, 10% holiday he’s proposed, its effects on the world’s reserve currency would be minimal.

“None of this information is explicitly disclosed, but most of the money is already in dollar-denominated securities,” said Richard Lane, a senior analyst at Moody’s Investors Service. “All else being equal, there shouldn’t be direct impact on the dollar.”

While the U.S. tax code requires American corporations to pay taxes on overseas earnings, profits are only taxable when they’re returned to the parent company. Hundreds of U.S. multinationals therefore indefinitely reinvest their earnings offshore, with the stash totaling $2.6 trillion in 2015, according to Congress’s Joint Committee on Taxation.

It isn’t easy to pinpoint how much dollars companies hold offshore. First, there’s no official data from the government on the tally. Second, firms are only required to give broad-stroke descriptions of the assets they own, and very few go into details of the currency component of the holdings. Third, companies don’t normally break down their assets according to the country of domicile, making it tough for strategists and investors to identify the location of any dollar-denominated securities.

If history is any guide, the effects of corporate repatriation on the greenback are often dwarfed by evolving monetary policies and economic realities.

When Congress last enacted a tax holiday in 2004, 843 companies brought about $300 billion home at a reduced rate of 5.25%, according to government data. Even though the dollar strengthened 13% the next year, the Federal Reserve’s decision to almost double its benchmark interest rate to 4.25% was the primary driver of the rally, according to JPMorgan Chase & Co.

To the world’s second-biggest currency trader, any boost to the dollar would be equally insignificant this time around. The Fed will be near the end of the current tightening cycle in about two years, just about when the overseas cash would be returning home, blunting its already marginal impact, said John Normand, JPMorgan’s head of foreign-exchange, commodities and international rates research. The central bank raised borrowing costs for the first time in almost a decade last December.

“The message from past experience is that relative monetary shifts are more important and dominant to corporate repatriation flows in determining currency outcomes,” Normand wrote in a note to clients. “This issue of corporate profits repatriation is a distraction for currency markets.”

Good for Trump

Even though the first-order effects on the dollar may be limited, any tax holiday could still indirectly boost the greenback, according to Steven Englander, global head of Group-of-10 currency strategy in New York at Citigroup Inc., the world’s largest foreign-exchange trader. The home-bound cash is critical to funding Trump’s proposed $500 billion to $1 trillion infrastructure plan, which is intended to bolster economic growth. The program may also spur faster inflation, leading to higher bond yields and inflows into dollar-denominated assets, Englander said.

“Assuming it’s a business-friendly deal, it’d support equities,” Englander wrote in a Nov. 9 report. “An equity rally will likely pull long rates up. I think these will generate a dollar-positive effect by attracting capital to the U.S.”

Stability, rather than strength, in the dollar might be just what Trump needs for his policies to succeed. He’s vowed to overhaul trade agreements and revive the nation’s sagging manufacturing and export sectors. A strong dollar makes American products more expensive to foreigners, and less competitive against trade rivals.

There might be limits to how much further the dollar can go, given it has already overshot analysts’ year-end expectations. The greenback has rallied 3.5% since Nov. 8 to 108.80 yen, compared with the median forecast of 104 yen in a Bloomberg survey. The currency will trade around that level and end 2017 at 109 yen, according to the consensus.

“We consider this issue to be too inchoate to justify owning dollars now,” JPMorgan’s Normand said.


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