The value of a currency is determined by the supply and demand of the currency in that particular country. When a currency of a particular country is high in demand by the traders, tourists travellers, investors and so on the value of the currency automatically increases. Here are some of the factors that have both negative and positive impact in the value of the currency of a particular country.
One aspect of dollar weakening is increase in exports. Thus having a weaker dollar does help to increase US economy as it increases the competition among the US goods, moreover, it also helps in the increase of sales of goods. This has direct impact on the increase in foreign demand, while keeping the US consumer demand domestic.
This does benefit in the increase in sales of the US companies, which in turn creates opportunity for more jobs and consumer spending. As the economy of a country fails the trading decreases, weakening of the value of the currency also helps to counter the trade deficit, which is considered as the most troublesome aspect of US economy.
It also helps to increase foreign investments and there are different methods through which the foreign investments can help the US economy and to have a stable value of the currency or US dollar. Over the past few years, it is found that there are several foreigner buyers that have shown interest in the US real estate. Studies by NARs also suggest that every one of the five real estate agents sold a house to a foreign buyer.
Wars do have a major impact on the value of the currency. When there is a terrorist attack in a country, it does increase the chances of war in the country. When a country is in a state of war or shows potential for war the demand for its currency decreases.
This officially caused problems in the financial markets and thus the Federal had to make changes in the interest rates. In the current situation, inflation is not a very big problem. However, concerning the risks of inflation, Federal Reserve might consider lowering the interest rates more than it is actually needed.
Unnecessary expenditure done by the government also affects the economy of the country. If the government keeps spending money in programs which are not necessary but costs a lot of money, does affect the value of the currency. The larger the government grows the more the value of the currency reduces.
People from all around the world come to US to for tours and visits, Canadians form an important part of this. As the Canadian dollars are also rising in sync with the US dollar the tourism investment is likely to increase further as people are able to save more. Thus as the currency of US weakens, it calls for tourism and thus has a positive impact over the economy of the country.
One aspect of dollar weakening is increase in exports. Thus having a weaker dollar does help to increase US economy as it increases the competition among the US goods, moreover, it also helps in the increase of sales of goods. This has direct impact on the increase in foreign demand, while keeping the US consumer demand domestic.
This does benefit in the increase in sales of the US companies, which in turn creates opportunity for more jobs and consumer spending. As the economy of a country fails the trading decreases, weakening of the value of the currency also helps to counter the trade deficit, which is considered as the most troublesome aspect of US economy.
It also helps to increase foreign investments and there are different methods through which the foreign investments can help the US economy and to have a stable value of the currency or US dollar. Over the past few years, it is found that there are several foreigner buyers that have shown interest in the US real estate. Studies by NARs also suggest that every one of the five real estate agents sold a house to a foreign buyer.
Wars do have a major impact on the value of the currency. When there is a terrorist attack in a country, it does increase the chances of war in the country. When a country is in a state of war or shows potential for war the demand for its currency decreases.
This officially caused problems in the financial markets and thus the Federal had to make changes in the interest rates. In the current situation, inflation is not a very big problem. However, concerning the risks of inflation, Federal Reserve might consider lowering the interest rates more than it is actually needed.
Unnecessary expenditure done by the government also affects the economy of the country. If the government keeps spending money in programs which are not necessary but costs a lot of money, does affect the value of the currency. The larger the government grows the more the value of the currency reduces.
People from all around the world come to US to for tours and visits, Canadians form an important part of this. As the Canadian dollars are also rising in sync with the US dollar the tourism investment is likely to increase further as people are able to save more. Thus as the currency of US weakens, it calls for tourism and thus has a positive impact over the economy of the country.
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