Question

Please think of one pro and one con of a strong dollar and justify it. If you think of the same pro/con as someone else's response, you need to give a slightly different reason. For this discussion, because I am giving two weeks for a response, you need to read everyone else's comment and respond to one person's response. Make your response lends a different perspective and is not the same viewpoint as someone else in the class. There will be penalties for not following directions for this discussion.

BELOW IS A POST FROM ONE OF MY CLASSMATES!

A strong dollar has many effects on the economy, and depending on your perspective these effects can be considered pros or cons. I want to focus on the view of the American people and American corporations. For the average American, a strong dollar means that their purchasing power is increased when buying goods from other countries as some of my peers have gone over. When it comes to corporations looking for funding, a strong dollar can increase the demand for bonds and drive down interest rates lowering the corporation’s cost to obtain funds. Lower cost of funds may motivate some corporations to seek out projects that they may not have otherwise which hopefully translates into more jobs and increased domestic trade.

      A con of the strong dollar is that you will see a lot fewer exports than you would otherwise. The dollar being strong means that most foreign currencies are less valuable (or weak) in comparison. What this means is that any foreigners looking to travel to America may decide not to because of the increased, possibly now prohibitive, expense of the trip. In this case, many businesses in America centered around tourist areas will suffer. Following that same train of thought, this means that manufacturers in other countries that source materials from America may decide to look elsewhere and start sourcing domestically or with some of America’s top trade competition. Lastly, a strong dollar can cause havoc on the financial sector as loans made to foreign countries in dollars may see a rise in the default rate as foreign borrowers may be unable to afford the payments with the exchange rate so far in the dollar's favor.

Answer 1

The Strong currency never shows the strength of a Country. So for many reasons a Strong dollar is good for us, but it also has its disadvantages.

PROS:

1)One of the great advantage of living in Country with strong currency(DOLLAR) is that the travelling becomes so cheaper and even affordable to common people. As for International traveler, Everything you buy overseas will be cheaper. For example, if the euro drops significantly in a year, almost every European countries will be cheaper for you.

2)Imported goods become cheaper, that is, costs less at home(USA) because most of everyday materials and electronics are being imported.

CONS:

1)As for a individual who is working for Foreign Employer, there is huge risk in shrinking the paycheck. That is, if The euro reduces by 20%, and you are working for foreign employer from Europe in America, then the paycheck shrinks by 20%.

2) Due the availability of imported goods at cheap rate, the rate of consumption of imported goods will increase rapidly which gradually effects the Domestic or Local Manufacture in the Country. The widespread use of foreign goods effect the decline in the usage of domestic products.

THERE IS NO PERFECT STAGE IN AN ECONOMY OF A COUNTRY, IT EVOLVES BY CORRECTING THE PREVIOUS MISTAKES. EVERY STAGE IN ECONOMY HAS ITS PROS AND CONS.