CURRENCY TRADING INFOR

When the dollar is low, you have to spend more dollars to buy a certain amount of foreign currency. Because prices in foreign countries tend to stay in line with their local currencies, a falling dollar generally makes buying things abroad more expensive.

Back home in the United States, the effects are a little more subtle. For domestic businesses that don’t have to import supplies or materials for production, the impact of currency fluctuations is relatively small. On the other hand, for businesses that rely on international trade, changes in the values of foreign currency can have a huge effect on their profitability. Foreign-based businesses find that the prices they charge in dollars translate to a smaller amount of foreign currency. In response, they can either accept lower profits, potentially hurting their stock prices, or increase their dollar prices to compensate for the adverse currency move, which can potentially hurt their sales.

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