Weak Dollar

Posted in Finance, Accounting and Economics Terms, Total Reads: 305
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Definition: Weak Dollar

Weak Dollar signifies that the dollar can be exchanged for a smaller or reduced amount of the foreign currency. It has a direct impact on the imports and the exports of U.S. This is because the goods and services when purchased from another country then the payment to the other country are done in the currency of the producing country.


It is not necessarily a bad situation .It is good news for the US tourism industry which means that US will be attracting more foreign tourists.

 

Example

So if the producing country (U.S) currency becomes weaker then it leads to higher exports and lower imports than before when the dollar was strong.


Suppose earlier if the US dollar could buy 100 units of product X from another country. If the dollar becomes weak then US would be able to buy less than 100 units of X from the same country.

 

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