The Power of a Weak Dollar
For many years, Uncle Sam was the big buyer in the world market. In part this was due to a “strong dollar ” A big buck could buy foreign goods inexpensively. It was also due to the outsourcing of production in countries with cheap labor. The finished product found a heavy market in the United States.
But now, it appears, that the American dollar is weak in global trade. The Wall Street Journal reports, “The U.S. dollar has grown weaker against the Euro, the British pound and other currencies.” This month the Euro rose to $1.39 cents.
But, irony of ironies, our weak dollar has its own strength. The weak dollar finds that imports from countries that have a stronger currency have become quite expensive. So, we import less. And vice versa. Buyers in other countries with strong currencies find American products a real bargain. So we sell more. The balance of trade turns in our favor.
Foreign producers have also opened factories in the U.S. Although the wages paid are high, they are not as costly as they seem because the foreign currency is able to lay its hands on U.S. dollars inexpensively.
To paraphrase Gilbert and Sullivan: “ Things are seldom what they seem. A weaker buck may rule supreme.”
A message from our CEO & publisher Rachel Fishman Feddersen
I hope you appreciated this article. Before you move on, I wanted to ask you to support the Forward’s award-winning journalism during our High Holiday Monthly Donor Drive.
If you’ve turned to the Forward in the past 12 months to better understand the world around you, we hope you will support us with a gift now. Your support has a direct impact, giving us the resources we need to report from Israel and around the U.S., across college campuses, and wherever there is news of importance to American Jews.
Make a monthly or one-time gift and support Jewish journalism throughout 5785. The first six months of your monthly gift will be matched for twice the investment in independent Jewish journalism.
— Rachel Fishman Feddersen, Publisher and CEO
