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The lowset Dollar
The Dollar: the basic monetary unit of the US, Canada, Australia, and certain countries in the Pacific, Caribbean, Southeast Asia, Africa, and South America.
Due to the lows of the dollar, we are not getting the most of our money. There are even places that don’t want to receive the dollar. In the past, showing the green paper made you look like a money person overseas, now in time all that have change. The weak dollar is trading a low level against the other currency like for example: the euro, just a couple years it only cost you $1.10 now $1.50 ; but not to blame the president but the dollar has lost 21% of its value against the euro since President Bush took office in January 2001. (businessweek.com)
How is this affecting the economy :
Businessweek.com report on in article that the weaker dollar has some benefits in the short term. It could lower the trade deficit, which is dangerously high. And it stands to boost job growth, especially in critical areas such as manufacturing. Says Dudack: “The decline in the dollar may not be as onerous as it looks.”But the dangers of a weak dollar aren’t evenly distributed, especially this time around. It’s mostly a concern for countries in Europe and Asia. A higher dollar makes it more difficult for U.S. consumers to afford products imported from those regions, which rely heavily on exports as engines of economic growth. A weak currency typically leads to inflation, because it prompts companies that export to the US to raise prices. In the same article report that the falling dollar also stands to help the US manufacturing sector produce more domestic jobs. As U.S.-made goods and services become cheaper compared to those of rivals in other countries, demand will increase. That will boost domestic production of machine tools, cars, even the long-troubled textile industry, according to Wyss.
For what is wrote above we can appreciated pros and cons on this matter but how this hurt you directly,
www.forbes.com share with us an article of six cases how it does:
First, a weaker dollar translates into a cut in the real spending power of American consumers–in effect, a reduction in real income.
Second, a weaker dollar weakens the role of the U.S. dollar as the world’s reserve currency. Why should investors and central banks around the world invest in US assets when their value is steadily declining?
Third, the chances of a weaker dollar leading to a sharp reduction in America’s trade deficit is highly unlikely since 40% of the current balance is due to oil imports that are denominated in U.S. dollars. An additional 20% is due to trade with China, which is, of course, controlling the value of its own currency.
Fourth, a weaker dollar is inflationary since it increases the cost of imports.Fifth, business leaders know that discounting prices may bump near-term revenue and profits but at a real cost to long-term profitability, not to mention inflicting damage to the brand name. This is what we are doing to the brand of America by trying to increase exports by lowering their price in the global marketplace. Better to stand firm on price and sell into global markets on the basis of what is great about American products: superior quality, innovation and service.
Sixth, investors seem to like a weaker dollar since the profits of American multinationals get a boost from foreign earnings being translated into U.S. dollars. Again this is short-term thinking and vastly overstated since most multinationals have sophisticated treasury departments that hedge currency exposures.
In conclusion: The weak dollar is good but at the same time is bad. We are in times of saving and smart expending; let’s think twice before buying something we don’t need; if that place you are going too you can get there by train or in foot let’s do that. We have to be in a budget a least until this storm pass; after the storm the calm comes.
Due to the lows of the dollar, we are not getting the most of our money. There are even places that don’t want to receive the dollar. In the past, showing the green paper made you look like a money person overseas, now in time all that have change. The weak dollar is trading a low level against the other currency like for example: the euro, just a couple years it only cost you $1.10 now $1.50 ; but not to blame the president but the dollar has lost 21% of its value against the euro since President Bush took office in January 2001. (businessweek.com)
How is this affecting the economy :
Businessweek.com report on in article that the weaker dollar has some benefits in the short term. It could lower the trade deficit, which is dangerously high. And it stands to boost job growth, especially in critical areas such as manufacturing. Says Dudack: “The decline in the dollar may not be as onerous as it looks.”But the dangers of a weak dollar aren’t evenly distributed, especially this time around. It’s mostly a concern for countries in Europe and Asia. A higher dollar makes it more difficult for U.S. consumers to afford products imported from those regions, which rely heavily on exports as engines of economic growth. A weak currency typically leads to inflation, because it prompts companies that export to the US to raise prices. In the same article report that the falling dollar also stands to help the US manufacturing sector produce more domestic jobs. As U.S.-made goods and services become cheaper compared to those of rivals in other countries, demand will increase. That will boost domestic production of machine tools, cars, even the long-troubled textile industry, according to Wyss.
For what is wrote above we can appreciated pros and cons on this matter but how this hurt you directly,
www.forbes.com share with us an article of six cases how it does:
First, a weaker dollar translates into a cut in the real spending power of American consumers–in effect, a reduction in real income.
Second, a weaker dollar weakens the role of the U.S. dollar as the world’s reserve currency. Why should investors and central banks around the world invest in US assets when their value is steadily declining?
Third, the chances of a weaker dollar leading to a sharp reduction in America’s trade deficit is highly unlikely since 40% of the current balance is due to oil imports that are denominated in U.S. dollars. An additional 20% is due to trade with China, which is, of course, controlling the value of its own currency.
Fourth, a weaker dollar is inflationary since it increases the cost of imports.Fifth, business leaders know that discounting prices may bump near-term revenue and profits but at a real cost to long-term profitability, not to mention inflicting damage to the brand name. This is what we are doing to the brand of America by trying to increase exports by lowering their price in the global marketplace. Better to stand firm on price and sell into global markets on the basis of what is great about American products: superior quality, innovation and service.
Sixth, investors seem to like a weaker dollar since the profits of American multinationals get a boost from foreign earnings being translated into U.S. dollars. Again this is short-term thinking and vastly overstated since most multinationals have sophisticated treasury departments that hedge currency exposures.
In conclusion: The weak dollar is good but at the same time is bad. We are in times of saving and smart expending; let’s think twice before buying something we don’t need; if that place you are going too you can get there by train or in foot let’s do that. We have to be in a budget a least until this storm pass; after the storm the calm comes.
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