Concerns About Weak Dollar
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Everybody is concerned about the weak dollar. But even as the greenback sinks to new lows against the euro and other global currencies, experts say this is not necessarily a bad thing for the U.S. economy.
The falling dollar pose problem for an economy in recession and facing higher inflation. Consumers have to pay more for imported goods like toys made in China or a bottle of wine from France’s Bordeaux region.
It also drives up the cost of commodities priced in dollars. And unless you’ve been living under a rock, commodities have skyrocketed to historic highs.
Confidence by international investors in buying dollar-denominated securities is also affected. Although many foreigners are still buying more U.S. securities than they are selling, there are signs that these investors are slowly shifting away from assets tainted by the greenback, such as U.S. Treasurys.
