Question

If the United States imports more goods from abroad than it exports, then foreigners will tend to have a surplus of US dollars. What will this do to the value of the dollar with respect to foreign currencies? What is the corresponding effect on foreign investments in the United States?  

Answer 1

If United States imports more than it exports then this means that the supply of dollar is likely to exceed the demand in the foreign market creating ceteris paribus. Hence one can infer that United dollar would be under pressure to depreciate against other currencies. If United States import more good from abroad that it Exports then foreign still tend to have a surplus of US dollars in this shall depreciate the value of dollar in respect to other currencies the currency are mainly determined by the real rate. They are in necessarily a positive correlation between surplus of US abroad however if the surplus foreigners have are getting big they might want to start selling United States dollar at a large scale thereby more sellers and buyers this will cause the dollar to against the respective country. Hence when the dollar will fall against other currencies the country's currency will weaken and it would lead to many problems and this would lead to a week economy the US government is in debt so they decided to print more money this hurts a country like Japan and Canada which rely heavily on exports of us since they are being paid in funds which are becoming less valuable Europe benefits their currency become more value relative to the biggest player they are essentially become wealthy. Weak currency is one whose value has depreciated significantly overtime against other currencies it is commonly found in Nations with poor economics fundamentals which may include a high rate of inflation current account in budget deficit in sluggish economic growth. Nations with weak currencies usually have much higher levels of imports compared to their exports resulting in more supply and demand for such currencies on international foreign exchange market if they are freely train while temporary week face in a majority currency provide surprising advantage to its exporter such a benefit seldom a close to exporters in week currency Nations since other factors such as high input cost and bureaucratic Red Tape may offset disadvantage. Every currency is also ruled by demand and supply when the demand of something goes out so does the price if most people convert their currencies into a single one the price of the single goes up and that currency become stronger currency because more dollars are needed to buy the same amount the dollar becomes Savi currency currency is a commodity.

Currency may help a country's export gain market share when is goods are less expensive compared to goods price in stronger countries currency the increase in sale may boost economic growth and jobs while increasing profits for companies conducting business in foreign markets. When purchasing American made items become less expensive than buying from other countries American export 10 to increase and the dollar weekends in contrast when the value of Dollar Rises exporters face greater challenges selling American made products Overseas because more of a v currency is needed when buying the same amount of goods price in a stronger currency inflation make Slime with economics import goods from countries with stronger currencies in contrast slow economic growth may result in deflation and become a bigger risk for some countries when consumers begin expecting regular price declines they may postpone spending and businesses may delay investing a self perpetuating cycle of slowing economic activity begins AV currency may boost consumers income and tax receipt while benefiting debtors when the value of a debt remains the same local borrowers Mein more easily pay down their death conversely payback their debt to foreign investors price in foreign currency become more expensive

Taking advantage of currency homes in the short term can be as simple as investing in the currency you believe will show the greatest strength against the US dollar during an investment time frame for a longer term strategy investing in stock market indexes of countries you believe will have appreciating currencies or investing in sovereign wealth funds which are vehicles through which government trade currencies can provide exposure to strengthening currencies. You can also profit from a falling dollar by investing in foreign companies or us companies that derive the majority of the revenue from outside the US and of even greater benefit those with cost in United States dollar as in lawn United State Investor by assets in the United States specially tangible assets such as real state is extremely inexpensive during period of falling dollar values because foreign currencies can buy more assets than the comparible United States dollar can buy in US foreigners have a purchasing power advantage finally investors can profit from a falling dollar value because foreign currencies can buy more sense than comparable United States dollar can buy in United States foreign having a purchasing power advantage. Finally investors can profit from a following United State dollar through the purchase of commodities are companies that support to participate in commonly exploration production or transportation. Predicting the length of United State dollar depreciation is difficult because many factors collaborate to influence the value of currency despite this having insight into the influence that changes in the currency value have a investments provides opportunities to benefit both in short and long-term investing in United States exporters tangible Assets and appreciating currencies or stock market provide the basis for profiting from the falling United States dollar. In the United States the financial accounting standard board is the governing body that Monitors how the companies account for business operations on financial statements the impact of rise or fall of the u.s. Dollar on investment is multifit it most notably investors need to understand the effect that exchange rates can have on financial statements how this relates to where goods are sold and produced and the impact of raw material inflation the Confluence of these factors can help investors determine where and how to locate investment funds understanding the accounting treatment for foreign subsidiaries is the first step to determine how to take advantage of currency movements the next step is capturing the arbitrary between where the goods are sold and their goods are made as the United state has moved towards becoming a service economy and away from a manufacturing company low cost provider countries have captured doors manufacturing dollars.the economy becomes weak and hence is ruled by the investors of the other countries.