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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.
The weakening of US dollar shows its immediate effect on the costs of foreign goods, as the costs increases rapidly. As there is a huge difference found in the trade deficit due to weaker dollar, the consumers in US are found to import more in comparison to what they export.
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.
Weaker dollar also promotes tighter monetary policy. Increase in the foreign goods also because inflation, likewise the weaker currency does lead to inflationary condition. The prices of luxury commodities are higher and when the dollars start falling, inflation surely hits the within the upcoming months.
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 also helps the foreign investors to look for Equity markets in US. In case the US dollar keeps falling the investors might look to buy on companies that have strong bases and are not at all affected by the economic slowdown. These are the two factors that majorly affect the US dollar and help it to get into a stable situation. As the foreign investors find that the weakening of the dollar is about to end, they tend to buy more. Lastly, as the dollar gets weakened, the companies move on to become easier buyout targets. Thus countries that are looking for good investment opportunities jump in to invest during these times.
As the US dollar gets weaker, the cost of travelling outdoor or foreign travel becomes very expensive. For an instance as the value of the US currency dropped at the beginning of the year the value of the Australian currency increased by ten per cent and simultaneously the cost of travelling to the country also increases. The increase in the cost of travelling is also visible when people travel to European countries too, although the change in rates is comparatively less in terms of percentage.
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.
The weakening of US dollar shows its immediate effect on the costs of foreign goods, as the costs increases rapidly. As there is a huge difference found in the trade deficit due to weaker dollar, the consumers in US are found to import more in comparison to what they export.
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.
Weaker dollar also promotes tighter monetary policy. Increase in the foreign goods also because inflation, likewise the weaker currency does lead to inflationary condition. The prices of luxury commodities are higher and when the dollars start falling, inflation surely hits the within the upcoming months.
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 also helps the foreign investors to look for Equity markets in US. In case the US dollar keeps falling the investors might look to buy on companies that have strong bases and are not at all affected by the economic slowdown. These are the two factors that majorly affect the US dollar and help it to get into a stable situation. As the foreign investors find that the weakening of the dollar is about to end, they tend to buy more. Lastly, as the dollar gets weakened, the companies move on to become easier buyout targets. Thus countries that are looking for good investment opportunities jump in to invest during these times.
As the US dollar gets weaker, the cost of travelling outdoor or foreign travel becomes very expensive. For an instance as the value of the US currency dropped at the beginning of the year the value of the Australian currency increased by ten per cent and simultaneously the cost of travelling to the country also increases. The increase in the cost of travelling is also visible when people travel to European countries too, although the change in rates is comparatively less in terms of percentage.
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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