The Advantages of a Weak Dollar

Image Credit: Hemera Technologies/ Images

The current economic crisis has brought the value of the American dollar down in comparison to the other major currencies of the world. While a weak dollar has its disadvantages, it is not an entirely bad situation. Certain businesses will actually see an increase in profit because of a weak dollar. On a personal level, a weak dollar can translate into more money in your bank account if you are familiar with the advantages of a weak dollar.



Companies that export goods to foreign countries whose currency is stronger than the dollar will find a weak dollar to be in their favor. If the Japanese yen is stronger than the American dollar, the Japanese will be able to buy more of the American goods for less. Often, American products are very popular abroad and if foreigners can get American goods for cheap, sales will certainly go up.


Video of the Day


If the American dollar is weak compared to the euro, then Europeans will find that it is very cheap for them to travel to the United States. This undoubtedly helps the tourism sector of American business. Foreigners will find that they can afford to splurge in America when the dollar is weak. Cities like New York, Las Vegas and San Diego see heavy amounts of foreign tourism, and report some of the biggest earnings when the dollar is weak internationally.



Many finance experts suggest that it is a good idea for Americans to keep some of their money in foreign shares. This is definitely good advice when the dollar is internationally week. The weak dollar will bring in extra returns for those who have money in foreign shares. In order to make money by putting your money in foreign shares, you should remember that the country in question should have a currency that is valued higher than the United States.


Foreign Investing

An international weak dollar means that Americans can make money by investing in foreign shares, as mentioned above. A weak dollar also means that foreigners can make money by investing in American stocks, bonds and real estate. U.S. stocks will be cheaper to buy for foreigners who are dealing in a currency that is valued higher than the dollar, and this means they will be able to buy more as well as afford to take more risks. Real estate is another area in which foreigners will be able to afford more, and many that may have not have thought about purchasing American property when the dollar was strong will think about it when the dollar is weak.