Discussion on currency of US dollar

A strong US dollar means that it can buy more of the other currency than it did before while a weak US dollar means that it has fallen in value compared to other currencies. I believe that the US dollar is relatively strong against other currencies based on exchange rates. It is not the strongest against every currency but it is strong for the most part. 

The US dollar comparison to other foreign currencies has never been exactly equal or a "apples to apples" comparison. The US dollar has always been stronger or weaker, it has never been exactly equal to another currency. Because of how much the USD value fluctuates, you have to look at the past years as well as the present year to really get an accurate idea of the current value to see the impact on the economy. I feel that it cannot be determined by looking at one year in itself. 

I looked at the IRS Yearly Average Currency Exchange Rate to better understand the relationship of the US dollar value to other countries. The values differ and the US is not stronger than every single country out there. But i decided to focus on the euro because the US deals with Europe a lot. When looking at the Euro Zone, the exchange rate has decreased from .940 in 2016, .923 in 2017, to .848 in 2018. This means that you get less money now than you did 2 years ago in Europe. Which equates to less euro for a US dollar.

An example of the impact of the strong US dollar on my own life is my 2-week 2019 Europe trip in June. The strength of the US dollar has made it cheaper for me to go to Europe. The strong US dollar will go farther in Europe. But foreigners visiting the US are at a disadvantage when our dollar is strong. US consumers also benefit by the strong dollar because it buys foreign goods at a cheaper cost. 

However, a strong dollar does not always equate to a strong economy. The US government actually benefits from a "weak" dollar because a weak dollar boosts the US economic growth at times.  A weak dollar helps US exports because the US goods will seem cheaper to foreigners. While a strong dollar can make exports less competitive. 

But a strong dollar still does benefit the US in a way that most people do not think about. Because the US currency is strong compared to others, international people want to buy US treasury bills and this pays for US debt. Foreign individuals want take part in our strong currency because it is valuable compared to others and has made us a strong and competitive economy   for the most part. 

I believe it is important to know all of this as a consumer and as a business person because it is important to know the relationship between all the currencies to be able to understand the impact on the economy. It is important to be aware of the pros and cons of a strong vs weak currency to make better business decisions.  

Sources: IRS. Yearly Average Currency Exchange Rates. Retrieved from https://www.irs.gov/individuals/international-taxpayers/yearly-average-currency-exchange-rates

 Reply on Discussion on currency of US dollar

I agree with the facts that are discussed above. It is true that when the US dollar is going to be strong against other currencies than the people of US can take significant benefit. The US dollar never remain stronger with all the currencies around the world but it has managed to stay stronger in many markets around the world. The US gets the major advantage of a stronger dollar however the other countries whose currency is weaker against dollar experience disadvantage. In a nut shell it is important to have deep insights of the foreign exchange rates in order to perform rational business decision.