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A Strong Dollar
The term a Strong Dollar is often used but rarely defined. A Strong Dollar as it relates to foreign exchange and foreign exchange rates is a U.S. dollar that can be exchanged for a large amount of another country's currency. An explanation of why foreign exchange rates fluctuate is beyong the scope of this discussion.
From the seller's perspective, a Stong Dollar makes it difficult for a U.S. based company to export, and it may make it more difficult for the buyer to be able to issue payment to the seller. Why? When the U.S. dollar is strengthening, its value is rising in relation to one or more other currencies. As a result, the strong U.S. dollar will buy more units of a foreign currency than previously. A result of a stronger dollar is that the prices of foreign goods and services drop for U.S. consumers, making imports more attractive to U.S. consumers and exports of goods from the U.S. less attractive to foreign buyers.
© 2011 by Michael C. Dennis. All Rights Reserved. Michael is the author of "Credit and Collection Handbook." E-mail questions or comments to him at mcdennis13@yahoo.com