The Pros And Cons Of The United States Dollar

A strong or weak United States dollar is a huge component of the world’s economy. Both have advantages and disadvantages, but which is the best for the United States? To answer this question, one must know the difference between a weak and strong dollar, the benefits and drawbacks of both, and how other countries react to the value. There are many factors that determine whether the United States dollar is strong or weak. These factors include supply and demand of products, market psychology of thoses buying and selling in the United States stock market, interest rates on imports and exports, and the purchasing power between the United States and other countries. Due to these features, the United States dollar fluctuates often. A strong United States dollar is a dollar whose value is higher in comparison to other countries. This means that the United States can purchase more foreign currency of weaker dollar countries. In 2015, the United States dollar was its strongest since the early 2000’s, but in the long run it has weakened. Compared to other countries, the US dollar is still considered strong. The benefits of a strong dollar include an increase in imports, more goods for consumers at a lower price, and an increase in income for multinational companies who have a …show more content…
Actually, a balance between the two is best for the economy and investors. This allows consumers to pay reasonable prices for imported goods and our manufacturers to compete in the global marketplace. However, the strong dollar creates conditions that weaken the U.S. economy and encourage the U.S. to run big government deficits, in turn causing the dollar to fall. The ongoing current account deficit is proof of this weakness. Foreigners have continued to spend money on U.S. stocks, bonds and property, resulting in a strong dollar. Then, since the strong dollar lowers exports and job growth, that strengthening causes the dollar to