Pros and Cons of US Currency’s Rise

4(http://dailyreckoning.com/why-a-strong-u-s-dollar-is-a-commodity-killer/)

Dollar has risen in a steady rate in these days. Many experts hold a positive view that dollar will keep mighty in the near future at least. US citizens are more confident when they found the money in their account becomes more and more valued. However, currency is always a thing with both pros and cons.

Avon Products Inc., which books 88% of its sales outside the U.S., can’t raise prices on its makeup and wrinkle creams fast enough to offset the dollar’s rise against the Brazilian real and other currencies. The suddenly stiffer price of a U.S. holiday means fewer foreign travelers booking hotels through Expedia Inc. ’s travel websites. European rivals to consumer-products makers like Procter & Gamble Co. now have an advantage in price wars for market share in the U.S. And utilities and steelmakers in Europe and Asia may buy less U.S. coal to fire their furnaces.”(http://www.wsj.com/articles/dollars-rise-squeezes-u-s-firms-1421800346This might be a example with sorts of extreme but what cannot be denied is that some US companies do get hurt by dollar’s rise. US has most GDP for dozens of years but it also has trade deficit for a long time, which is always been considered as a negative signal for development. “The US imports commodities and merchandise from over 240 distinct geographic markets. Inbound shipments may be headed for US consumer markets or moving along global supply lines that crisscross national borders. The US is the world’s third-ranked (after the EU and China) exporter/importer of intermediate goods. By value, the US takes the largest share of global imports overall.”(http://www.datamyne.com/us-import-data/?utm_source=google&utm_medium=cpc&utm_term=us+imports&utm_content=US+Imports&utm_campaign=Datamyne-+US+Import/Export+Trade+Data&gclid=CKnys8umpMMCFYRFaQodY08AWQ)If we just put our view on import, then we should be happy for the US importers. Consumers can buy thousands of stuffs with a relatively lower price than before. And firms who depend a lot on importing goods can lower their marginal cost to be more competitive. But things are not so optimistic for us if we perceive this issue in another perspective—export.

Basically, export is the essential fuel to push the economy moving forward, especially for a big country with a huge amount of population. China is an exemplary country who made a surge of economy by exporting manufactures, including apparels, toys, food and so on. Though we have to say that US really did a good job to keep a high GDP (may be attributed by high level of income), with trade deficit, expanding export is still another benefit if it is not indispensable, to say the least. Therefore, US should be eager to find an eclectic point to regulate its currency for further progress of the economy.

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