Pros And Disadvantages Of Strong Dollar

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Register to read the introduction… What will happen when there is stronger dollar? Strong dollar is good? Strong dollar is bad? Who will be affected the most? Who will be benefited by strong dollar? Who will be hurt by strong dollar? Consumer sees lower prices on foreign products or services when dollar has risen. Obviously, strong dollar benefit the United State consumer. It is because foreign products become cheaper even more affordable when the dollar is strengthened. For example, a luxury handbag or a car that once was too expensive to own, may be purchased for a cheaper price thanks to a higher exchange rate. Next, lower prices on foreign products or services help keep inflation low. Price imported is not “expensive” when dollar is stronger than other currencies. United State consumers benefit when dealing with foreign travelling too. Vacations and trips to foreign countries become bargains as travelers are able to see the world at adjusted package prices. Here, not only has the cost of travel (buying a ticket, booking a hotel room) become cheaper, voyagers can also stretch their budgets to include more activities that would have otherwise been foregone. This tends to boost consumer confidence as the shift in exchange rates make US citizens feel wealthier. Besides, the United State investors can purchase foreign stock or bonds at “lower” prices. When Federal Reserve strengthens the dollar, they are directly raising the purchasing power of every single American. …show more content…
The value of a currency can be viewed from two ways, one is from a domestic another is an international perspective. Domestically, Consumer Price Index (CPI)is an index number and inflation indicator that measures the change in the cost of a fixed basket of products and services, including housing, electricity, food, and transportation. We also can use Consumer Price Index to measure changes in the purchasing power of the dollar over time. Our purchasing power of the dollar is depends on the Consumer Index Price. When Consumer Price Index is going down, the value or the purchasing power of the dollar is declining too, which means, the dollar is buying less. We say that the value of the dollar is stable if the Consumer Price Index is relatively stable. When the Consumer Price index is going up, the value or the purchasing power of dollar is increasing, we say that the dollar is strengthened. Besides, price increase or decrease also affects our purchasing power of dollar. When price product failing, we can even say that the purchasing power of the dollar is increasing. While the price product rising, we can even say that the purchasing power of the dollar is

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