5 Things That are Affected By A Stronger Dollar

photo by Earl53

To help understand the different ways that the markets are affected by each other, I’m listing 5 things that are affected by a stronger dollar.

1. As you saw with last week and especially with today, oil’s price will drop when there’s strength in the dollar. Oil prices around the world are based on our currency. I’m not old enough to remember it, but the dollar used to be linked to gold up until 1973. Since then it’s been oil that linked to the dollar (not officially). As our dollar got weaker, the price of oil went up.

2. The exchange rate of other countries’ currency fluctuate as our dollar goes up or down. This year more money is being spent by foreign tourists because the dollar has been so weak compared to their country’s currency. With a weak dollar a lot of foreign investor like India are buying large share of corporations like what happen with Citicorp. This could and should change with a stronger dollar.

3.When our currency is strong our buying power is too. The price of food and other necessities have risen quite a bit this year because of a weak dollar. When our dollar gets stronger it gives us the ability to buy more. The prices of food have risen , but even with a stronger dollar the prices won’t come down to where they were at the beginning of the year (unfortunately that’s the way of life).

4. The stock market has suffer greatly with the weaker dollar. When the dollar strengthens investors put their money to work in the market. The value of the company is stronger and together the market grows.

5. We as Americans feel better about the economy when the dollar is strong. I know that if my dollar goes further, I feel better. I get better deal shopping, I have more to invest, as well as saving a little more (higher interest rates). Overall I feel stronger as an American.

I know that there are many other things that are affected, if you would like to share any of them, please do so in the comment section of this post.

P.S. Want to learn more about the stock market? take a free two week trail with Jim Cramer from TheStreet.com

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