When the United States dollar becomes stronger, then foreign goods
and services become cheaper for Americans, while goods and services from
the United States will become more expensive for foreigners, causing
imports to rise and exports to decline.
A weaker dollar causes the
reverse scenario: more expensive imported goods and services decreases
imports, while cheaper American goods and services increases exports.
Thus, the trade balance
of any country is largely determined by the value of the domestic
currency in relation to other currencies. However, when the foreign
exchange rate of a currency changes, it takes at least several months
before it has any effect on the volume of imports and exports.
Yes, Focus will be on strong US Dollar, For instance, if the dollar suddenly weakens, the U.S. trade balance
will usually worsen for a few months. Immediately after a currency’s
value drops, the volume of imports remains about the same, because most
import/export orders are taken months in advance, but the prices, which
are listed in domestic currency, rise. On the other hand, the value of
the domestic exports remains the same, and the difference in values
worsens the trade balance until the imports and exports adjust to the
Please best my answer if helpful. Thanks :)
Nov 22nd, 2014
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