hr: Money

Photo Credit: pfala
In the recent past, you used to be able to fetch around $0.90 a euro. Nowadays the euro fetches nearly twice as much. It doesn’t take a math genius to figure out that European goods now cost more in terms of dollars, which has devalued tremendously, hurting the US economy.

However, there is a bright side to this situation. This has also brought a new influx of visitors from Europe who are exchanging their money for cheap American goods and services.

If you’re a manufacturer of goods and stuff, this is good news for you. A weak local currency favors producers of stuff because they have one big advantage over their foreign counterparts - cheap goods.

Cheap currencies are a way of transferring economic power from consumers to domestic producers. A weak dollar makes it cheaper to buy local goods than it is to buy imported ones.

Low currency means high returns on capital; it also means that foreign investors will enter to acquire relatively cheap assets. It also stimulates employment and production, and domestic corporate profitability soars.

So, if you look at the situation from a slightly different angle, it would seem that having a weak dollar could work in our favor.