Stronger US Dollar Case Study

The exchange rate is the price of one currency in terms of another. A fall in the value of the pound is known as a depreciation and affects both the level of aggregate demand and the costs of production for firms in the UK economy. //One way in which a fall in the exchange rate can be beneficial for the UK economy is that it “should

Global American businesses are also more likely to be successful because of the American concept of investing in Europe. Many companies compare the economic impacts of Europe as a whole instead of as single countries. "There is a very real possibility that US corporations, given their lower cost base and the tendency they have already shown to view Europe as a single market, will be the real winners from monetary union," according to a report by Price Waterhouse, the international consultancy.

The U.S. dollar peaked in value in 2000-2001 and has been in a significant decline ever since. There was a relatively brief period in 2008 when the dollar rebounded quite sharply due to the worldwide financial crisis and economic meltdown, when there was a global rush to the safety of U.S. treasury securities. But since then, the dollar has resumed its long-term downtrend. In the recent years the dollar has been improving relative to other currencies, becausee of the decline in those other currencies.

Exchange rates fluctuate in response to a multitude of factors. Upswings and downswings in the exchange rate can have both positive and negative consequential effects. Depreciation drops the value of the dollar and permits owners of foreign currencies to purchase a greater amount of Australian goods. Hence, depreciation makes Australian exports cheaper and accordingly

When an input (machinery, components, capital, labor, etc.) is denominated in a foreign currency, the risk exists that an unfavorable exchange rate movement will increase the cost of doing business. When the products are priced and sold in a foreign currency, an adverse exchange rate movement will make the product appear more expensive to consumers, decreasing demand or forcing the company to reduce its own profit margin to maintain lower price levels. For companies with integrated international business systems, an exchange rate shock can literally force them out of business, with their operations experiencing pressures from both cost and profit centers.

So, in this case, it would take fewer dollars to purchase the same amount of Japanese Yen, U.S. goods become more expensive to Japanese buyers, and Japanese goods become cheaper to U.S. buyers.

Addressing the Canadian mining industry from an economic angle, one would agree that this industry has provided employment, revenue, community development and lots more to Canada especially to its local residents where mining firms are located. (M.A.C, 2014). Mining is amongst Canada's most essential economic sectors. It contributes enormously to Canada's gross domestic product. Part of the reasons why this industry has remained a key economic driver is that it has been able to remain competitive. For the industry to be competitive, they must have access to key market, a regulatory system that is efficient and a pool of talent to combat the shortage of skills.

In light of the surplus steel products in the U.S., Nucor along with other steel producers had to lower their prices in order to compete with the extremely low priced foreign steel that flooded the U.S. market. Nucor was not adversely affected by the price change; in fact they were able to maintain their financial health (Thompson, 2007).

There are many reasons why the dollar would fluctuate. The strength and weakness of a dollar depends on a number of factors such as inflation and trade deficits. To save the economy from inflation, the Federal Reserve will increase interest rates causing the economy to slow and the value of the dollar to decrease. Trade deficits can also devalue the US dollar. Although the high trade deficit is causing the dollar to fluctuate, the deficit could be a way to make the dollar stronger. Because we are borrowing from other countries, with our interest rates being higher, they would want to buy the US dollar to invest in the interest rate market.

BHP are skilled in communication through various mediums, AGM, Conferences and market releases. BHP CEO, Andrew McKenzie state recently, that due to commodity prices BHP expect a 31% in earning over six months, while still maintain the progressive dividend policy with a 5% increase (Saunders, 2015). Maintaining a dividend policy through adverse conditions demonstrates to markets, the company managers understands the environment in which they operate, particularly the cyclic nature of commodity prices. With a cyclic nature of commodity prices through supply and demand changes, earnings follow and multi commodity business like BHP are hit the hardest losing across the boards as most commodities prices are paired like coal and iron, iron and nickel. Which the preparation of the market is education and fore warning to

To create a competitive advantage, a mine has to properly manage its exposure to gold price fluctuations. This is not an easy thing to do since there are so many factors to consider: when, how much, and how to hedge the gold production. Firms in this industry differentiate themselves based on the risk management strategies they implement. Furthermore, mines should also be able to minimize the cost of gold production along with making large sunk costs. Operating in

The value of foreign currencies in basket foreign currencies are weighted according to the value of trade with the domestic country, in this case, it is U.S. Dollar. The home currency, U.S. Dollar means that the home currency is usually worth less than the imported currency. The purchasing power of South Korea and Japan is still strong compared to the U.S., even though, it decreased from previous year. However, the weight percentage as well as the U.S. exports including goods only of Canada and Mexico are higher for 2006.

When currency is devalued as a potential gain in the market these benefits are short-term. many times there are short-term benefits but in the long run the country with low labor cost and efficient manufacturing would boost exports.

The article further highlights the benefits of the inflating oil price and the falling currency, which can mostly be seen within small-to-mid tier energy stocks for oil and gas. For example, Beach Energy’s shares has nearly doubled from 35c on

200). The intensity through which the fall has occurred in last 1.5 years in the export products costs have contributed towards high amount of financial stress and has produced a negative impact on the economic outlook for all the export oriented nations.