The Strength of Dollar Paper

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The Strength of Dollar

All words have their certain meanings. For instance, “strong” and “weak” are usually

considered opposite of each other, so one might think strong is good and weak is bad, in general

meaning. But when it comes to the value of currency, it’s not that easy to understand. The term

“strong” and “weak” are used to compare the value of currency (such as U.S. dollar) relative to

another currency (such as the Euro). The words such as strong and weak, rising and falling,

appreciate and depreciate, inflation and deflation are relative terms in the world of foreign

exchange. The U.S. dollar is not only used as a global currency but also as an exchange tool for

currencies.

A strong dollar means that the U.S. dollar has risen to a level that is near historically high

exchange rates for the other currency relative to the dollar. On the other hand, weak dollar means

the U.S. dollar has fallen in value compared to the other currency. Taking about the impacts of

the weak dollar, it does not have any effect on the price of American local goods and products.

Weakening dollar affects imports and exports, the United States exports find benefits with the

cheap price of American products in foreign market (Momoh, 2019).. Consumers have to pay

more for imported goods since when the value of dollar is weak, currency buys less of a foreign

country’s goods or services. While a strong dollar means that the currency buys more of a

foreign country’s goods or services, which is good for the consumers because the things

(imported products) they want to buy are cheaper.

It does not matter whether the value of a currency is strong or weak, it always has impact

upon the business and global economy. Many people believe that declining value of a currency is

a bad thing, instead weak dollar presents several profit opportunities. The weak dollar usually

limits the purchasing power internationally, so people with export business can have negative

impact. While the domestic business can make a good amount of margin boost through the gross

domestic product during an economic downturn. Because exported goods cost less, foreign

buyers purchase them in greater amounts. In United States, U.S. dollar and the gas prices has

inverse relationship between each other. When the value of dollar weakens the price of gasoline

increases because the nation depends, at least on imported oil (Momoh,2019). So, the strong

dollar and weak dollar each have positive and negative effect. A strong dollar helps U.S.

consumers because it makes foreign products less in price. However, it hampers the U.S. exports

which consequently affects U.S. production and employment.

U.S. business can benefit from both strong and weak value of currency. A weak currency

may help a country’s exports gain market share because the goods that priced when the currency

was strong will drop their price while the currency is weak. The increase in sales can help in the

economic growth and jobs, while increasing profits for companies conducting business in foreign

markets. Everybody wants to have the value of currency to be down to encourage exports and to

have stable competition. A strengthening U.S. dollar means that it now buys more of the other

currency than it did before (Momoh, 2019). A strong dollar benefits American consumers with

cheap imports and less expensive foreign travel or services. At the same time, American

companies that export or rely on global markets for the bulk of sale have been hurt.

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The Strength of Dollar All words have their certain meanings. For instance, “strong” and “weak” are usually considered opposite of each other, so one might think strong is good and weak is bad, in general meaning. But when it comes to the value of currency, it’s not that easy to understand. The term “strong” and “weak” are used to compare the value of currency (such as U.S. dollar) relative to another currency (such as the Euro). The words such as strong and weak, rising and falling, appreciate and depreciate, inflation and deflation are relative terms in the world of foreign exchange. The U.S. dollar is not only used as a global currency but also as an exchange tool for currencies. A strong dollar means that the U.S. dollar has risen to a level that is near historically high exchange rates for the other currency relative to the dollar. On the other hand, weak dollar m ...
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Tags: inflation and deflation US dollar global currency foreign market value of dollar introduction to business