Posts Tagged ‘dollar’

The Real Value Of A Falling Dollar

Wednesday, October 13th, 2010

The value of U.S. currency has gone down nearly 10% against the euro in the past three months, but the impact on exports, tourism, the price of oil, and foreign investment may not necessarily be as bad as it seems…

  • When the value of the dollar falls, it means that $1 is worth less compared to one unit of another form of currency. So if $1 was once worth 1 euro, a fallen dollar might be worth only half a euro. That makes U.S. dollars cheap to euro-holders, and euros expensive to dollar-holders.
  • A cheaper dollar means that U.S. goods are more attractive to foreign buyers, so exports will likely rise. Since many American companies make a good portion of their profit outside the country, this could be a significant boost to the economy. A weak dollar is also an enticement for foreign tourist to visit the U.S. and spend lots of euros and yen!
  • The price of imported goods is going to increase. Of course, this could just encourage Americans to drive domestic industry by purchasing more affordable American-made goods. But not every product can be duplicated domestically.

Facts & Figures

  • In 2009, foreign tourists in the U.S. were responsible for $120 billion in revenue.
  • In July, an 8GB iPhone selling for $99 would have cost an Italian customer 78 euros. Today it would cost only 71 euros.
  • If they cashed out now, investors in the Euro Stoxx 50 index would be up 17% from 3 months ago simply because of the change in the dollar’s value.

Best Quote

“International finance isn’t pretty. If everyone focuses on exports, it’s a race to the bottom in exchange rates.” – Aroop Chatterjee, Currency Strategist at Barclay’s Capital

Our Ever Weakening Dollar

Tuesday, August 10th, 2010

As concerns about the struggling economic recovery rise, the U.S. dollar falls.

  • The dollar index has hit a 3 month low (81.354) after reports were released that the economy slowed 2.4% in the second quarter.
  • Other currencies, like the Euro, Sterling, and Aussie, increased.
  • Experts said that the rise in other currencies is unlikely to continue if the U.S. economy continues to struggle.

Facts & Figures

  • The Euro rose 0.2% to $1.3072, nearing a 3 month high.
  • The Sterling hit a 6 month high of $1.5820.
  • The Yen fell from an 8 month high.

Best Quote

“We’re seeing a disconnection as U.S. data stays weak yet risk appetite is strong. Weak U.S. data will translate into risk aversion at some point.” -Tom Levinson, Currency Strategist, ING

The Dollar is…

Sunday, July 5th, 2009

The (U.S.) dollar is the official currency of the United States.