Strong or Weak Dollar Is Better?

1921 WordsOct 26, 20088 Pages
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…show more content…
) Hence, there is essentially a self-correcting mechanism in the foreign exchange market. A stronger dollar basically leads to a weaker dollar while a weaker dollar eventually leads to a stronger one through the implications of growth. Next, the United State firms find it harder to compete in foreign market. When the US dollar strengthens, foreign trade partners will have to pay more euros and pounds in order to make up for the appreciated dollar when they import from the Unites State. The increase in dollar will eventually decline the demand as American made goods become less attractive to buy at the consumer level in foreign country. This is because the United State has to compete with lower price foreign goods. This slump in demand will ultimately translate into thinner profit margins of manufacturers and producers in the United State, reducing expansion potential in the country. The result in the longer term will be slower growth even as the United State consumers up their near term standard of living. Besides, foreign tourists find it more expensive to visit the United State. For example, I’m a Malaysian. If I wanted to exchange money to have a vacation at either the United State of America or Australia, I have to compare the exchange rate. In the past, exchange rate between Australia Dollars(AU) and Malaysia Ringgits(RM) was RM 2.8 per AU while exchange rate between the United State
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