Think Of One Pro And One Con Of A Strong Dollar And Justify It.. Instructions:
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.
Other students’ posts:
student 1
12:06pmMar 2 at 12:06pm
When the country has a strong dollar has effects on the economy but, depending on one’s perspective, it will be decided has a pro or con. For example, some American corporations and people will see a strong dollar as the opportunity to purchase goods from other countries. An American corporation will see a strong dollar to increase its demand for bonds and lower interest rates which lower corporation cost to gains funds. Some corporations will look for ways to do projects which will increase the opportunity to create new jobs and increased trades with other countries.
In addition, the con of a strong dollar may cause countries exports to decrease. Also, foreign currencies are devalued. For example, if a foreigner wants to travel to America, he/she will not want to due to that it will be an expensive trip. Also, tourist companies will suffer because people will not spend money on expensive trips. To continue, companies that received goods from America will decide on looking for them somewhere else. This will cause America to lose trade with other companies. There will a problem with the currency values to be devalue making companies loans from foreign countries to rise to make them pay more for their payment. The strong dollar has its cons when it comes to their point of view of the holder.
Response from student 2
12:39pmMar 2 at 12:39pm
Hello student 1,
It’s interesting you mention that the strong dollar will increase imports and decrease exports. While one would assume that it is a great benefit for the U.S. to acquire products at a lower price, it is equally as detrimental to have a decrease in exports. Tourism in the U.S. definitely will decrease because of the same reason that tourism to other places will increase. It is beneficial for American’s to travel to other places because the use of their dollar will go further.
Student 2
12:34pmMar 2 at 12:34pm
A strong dollar occurs when the dollar rises in value against other currencies in the foreign exchange market. A strengthening U.S. dollar means it can buy more of a foreign currency than before.
A pro of a strong dollar is that it makes traveling abroad cheaper. Since the U.S. dollar can buy more of a foreign currency, it will be less expensive for Americans holding U.S. dollars to buy things in other countries. It gives them a greater degree of purchasing power overseas.
At the same time, American companies that export or rely on global markets for the bulk of sales have been hurt. U.S. companies conducting business abroad are hurt with the presence of a strong dollar. This is a con because companies that make their income from foreign sales decrease in value on the balance sheet. This strengthening dollar decreases the value of companies’ international sales and profits. Some well-known examples of this are McDonalds and Hasbro because a large percentage of their sales occur overseas. Hasbro has taken a $30 million hit to its sales in its recent quarter because of the stronger dollar.
Sources
Hayes, Adam. “Pros and Cons of a Strong Dollar.” Investopedia, Investopedia, 5 Feb. 2020, www.investopedia.com/articles/forex/051415/pros-cons-strong-dollar.asp.
Monica, Paul R. La. “Why the Strong Dollar Is so Bad for Business.” CNN, Cable News Network, 6 Nov. 2018, www.cnn.com/2018/10/29/investing/strong-dollar-earnings-stocks/index.html.
Think Of One Pro And One Con Of A Strong Dollar And Justify It.
