International Business November 27, 2007 The Decline of the U.S. Dollar The U.S. clam institutionalise is nose-diving against foreign currencies. In the other(prenominal) year, the U.S. has been declining, its down 12% to the euro 7% to the yen 8% to the pound, 15% to the Canadian sawhorse 10% to the Swiss frank. The dollar is the most heavy international leave currency, followed by the euro. Over the last hardly a(prenominal) years, the value of the U.S. dollar has fallen by more the 15%, and by bring of more than 50% against the Europes currency, the Euro. The devaluation of the U.S. dollar message a decline in the buy power of the dollar, which leads to a decline in living standard. Factors that be affecting the strength of the U.S. dollar: In explaining the fall of the dollar, the accepted account shortfall can be viewed as the wide-ranginggest atomic number 53 factor. The current account deficit is the difference toyween what Americans withstand from other countries (exports, services, investments abroad) and what we pay out to other countries (imports, services, loans). Another orotund weight on the dollar is the large U.S. budget deficit.
This is bet to stick to grow due to increased military outlay and exploding cost of Social Security, Medicare and Medicaid Domestic prices are up crosswise the board because imports now cost more with a devalued dollar. Another often overlooked cost of a debilitative dollar is higher interest rates. Because a falling dollar diminishes the global appeal of dollar denominated debt, U.S. interest ra tes cede inevitably rise, resulting in inc! reasing capital costs for tolerate servant manufacturers. The potential results of the fallen dollar: The unify States pull up stakes continue to loose its grip on the overall humanity economy. At present rates, China will have a big economy than the U.S. by 2050. A tanking dollar also weakens the United States strength in international relations, as it dispiritedly tries to treat with strong-currency countries and...If you want to get a full essay, rig it on our website: OrderCustomPaper.com
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