Strong or Weak Dollar is Better?
Strong is good. Weak is bad. These generalizations sound simple enough, but they can be very confusing when come to money. Is a "strong" U.S. dollar always good? Is a "weak" dollar always bad? Understanding of it is a necessary in marketplace. The term such as “Strong” and “weak” dollar is a “hot topic” which always bandied about by economist on a daily basis and also public. This issue is so important to almost every one. It seems like part and parcel of people who very concern about currency likes investors, economist, foreigners who study or working in the United State and so on.
What strong dollar and weak dollar mean? Strong dollar is strong in compare to other foreign currency while weak currency mean dollar weaker than other currency. The terms strong and weak, rising and falling, strengthening and weakening, appreciate and depreciate are relative terms in the world of foreign exchange. Recently, Federal Reserve cut the interest rate by half and another quarter cut, will the rate cut affect the exchange rate?
The Federal Reserve rate cut has weakened the dollar. Is the rate cut benefit to dollar? Weak dollar, lower currency compare to foreign currency, has no effect on price of local products which produce in the United State. But affect import and export goods. The United State firms find it easier to sell goods in foreign markets. Thus import American goods are less competitive pressure to keep price low. Thus, weak dollar benefit U.S exports by making American goods cheaper in foreign country. Foreign tourist can afford to travel and visit the United State. When dollar is falling, purchasing power of foreigner is increasing. Purchasing power is the amount of value of a good or services ...