Question

What other important U.S. market conditions does a strengthening dollar affect? Explain.

Answer 1

There have been a lot of discussions over the topic of whether a stronger Dollar will be in favor of America or a weaker Dollar. If we talk about a stronger dollar, the biggest advantage which the country is going to get is that it will have cheaper imports and the consumers have to pay less amount of money for the products and services imported from other countries. But having a stronger dollar will have a negative impact on the exports as the exported goods will become costlier for the foreign consumers and thus they will avoid USA made products.

We must look at the improved exports and several other benefits associated with the weaker dollars which are stated as below:-

• Weaker dollar will improve the exports from USA to other nations as the foreign consumers will have to spend lesser money to buy USA made products.
• Having greater exports will result in the economic growth in the country.
• Due to increased exports, there will be greater employment opportunities to the USA citizens thus the problems of unemployment can be tackled down effectively if the value of dollar is relatively weaker than other currencies.
• The country can have a positive trade of balance by having lower Dollar value.

Looking at the various advantages of having a weaker dollar, it is favorable to have a weaker dollar for the long term benefits to the country.