Weak Dollar vs. Strong Dollar

Topics: United States dollar, Currency, Dollar Pages: 3 (952 words) Published: November 3, 2010
Weak Dollar vs. Strong Dollar

With the economy constantly changing, we are starting to see drastic changes in our dollar. A countries currency determines their strength in the market and their inflation rate. With a higher inflation rate, they are able to buy more and do more for a cheaper price. To help us better understand the difference between the weak dollar and the strong dollar, we will go in depth with both weak and strong dollars and its advantages and disadvantages, the currency monitor, the causes of the weak and strong dollar, and how it fluctuates and affects operations.

The strong dollar is a dollar that could be exchanged for a large or increasing amount of foreign currency. The strong dollar policy was set up by a desire to encourage bondholders to not sell their US Treasury Bonds. The strong dollar is said to increase the price of foreign exports, making it more expensive and hurts the profits of corporation selling to the foreign markets. As of today, the strong dollar impacts the foreign countries positively, however for the United States; the strong dollar has a negative impact on the economy. Having a strong dollar has many advantages and disadvantages. The strong dollar lowers the price of foreign goods and services. With the strong dollar, we are able to buy foreign products and goods for a cheaper price. Luxury products such as LCD televisions, handbags, and Western European sports cars seem more affordable with a strong dollar. Having a strong dollar, making trips to foreign countries are also more affordable making available more part-time jobs in industries such as hotels and airlines. Tourists are able to expand their budgets and enjoy more activities while visiting other foreign countries like Malaysia. The strong dollar will reduce inflation, making raw materials and intermediate goods appear cheaper and thus reducing the overall production cost. With the many advantages of having a strong dollar, there are many disadvantages...
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