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Weak US Dollar - despair or celebration?

I talk to quite a few people each and every day and regularly do I hear people's concern about the weak US Dollar. But how much of a concern should it be?

The answer largely depends on how you are looking at it. A weak US Dollar may actually be great for the US economy in the short run. A weak currency makes US exports cheaper and therefore more affordable to foreign buyers, which in turn helps close trade deficit. American manufacturers can sell more at lower prices, so companies like Boeing and Caterpillar love the weaker dollar.

A weak Dollar is also great for attracting tourist to the US. A European traveler's Euro or British pound will go a lot further than it used to. American retailer's will also benefit from the tourist's spending, putting more money into the overall economy. It is like going to a department store and everything is 30% off. You may spend more than you anticipated because it is a bargain to you.

The weak Dollar also stimulates the US Education sector. More foreign students are able to come to the US to study. Even though, US education for an International Student is still quite costly, it is cheaper given the Dollar's value currently.

Then people ask, how about the stuff you buy at Wal-Mart etc where a lot of it comes from China? Well, here is the good news: The Chinese currency, the yuan, is tied to the dollar, so in essence a weaker or stronger US dollar does not greatly affect prices.

Now here is the bad news: To compensate for the dollar, oil-rich nations charge more per barrel of oil, which in turn increases gas prises in the US. Another impact is created when traveling. A US tourist in France, for example, will be able to spend less money because the prices are seemingly higher.

So, in the short run, a weak dollar is not necessarily bad, in the long run though foreign investors may be less likely to invest in US Treasury securities without a higher interest rate, which in turn makes it more difficult for US consumers to borrow money, which is bad.

So, in my opinion, nothing's bad until it becomes an extended or permanent condition in the US economy.

Please post any thoughts you may have. All feedback is greatly appreciated, because it helps gain different perspective on an issue that we are all affected by.

Thank you!

Posted by Mina V Garrey - Commercial Capital Properties, Los Angeles, CA on 03/27/2008 01:40 PM

Comments (2)

us dollar, despair, celebration, good or bad, us economy

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2 Comments on Weak US Dollar - despair or celebration?

I am sorry but oil prices are high because oil companies are making major profits, last year one company paid a CEO A MILLION DOLLARS PER DAY, thats right $365,000,000 just for ONE GUY, and they still had a profit in the billions. While oil companies might claim it is because of this and that and this and that its all a line of ummmm junk LOL, just padding their bottom line (p.s. bush wont do anything to cap profit or stop their price gouging(sp) because he and his family are oil guys)

03/27/2008 01:49 PM

by Chris Horton (Horton's Lawn Care L.L.C.)

Hi Chris, I don't dispute that oil companies are artificially inflating the oil prices to increase profits for their investors and themselves, but I do believe that even without the oil comapny's increase the price per barrel is up because of the weakness of the dollar compared to it's value a few short years ago.

I did hear that report as well about the bonuses etc, and trust me I absolutely do not agree with it.

03/27/2008 02:04 PM

by Mina V Garrey - Commercial Capital Properties, Los Angeles, CA (Commercial Capital Properties)

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