I’m not an economist, not by a long shot, but it seems like an undervalued U.S. dollar must be bad for business in this worldwide economy. At today’s exchange rate, €100,000 equates to $150,000, which makes doing business overseas pretty expensive for American companies.
On the other hand, the value disparity can make the cost of goods from U.S. manufacturers look very attractive to foreign companies. According to a story by NPR’s Mhari Saito (www.npr.org
), one manufacturer in Cleveland, Ohio, has experienced increased orders despite increasing raw materials costs. The company’s vice president, Greg Gens said, “‘When we go overseas now, a dollar-denominated price is something more competitive – if you are competing against companies that are selling in euros, for instance. So there is an advantage as we set up and try to get product into Europe or Southeast Asia.’”
While the weak dollar spells reduced imports, and a continuing weakened economy overall, many manufacturers can capitalize on the disparity by emphasizing the lower cost of their goods in relation to overseas competitors. Increased exports are sure to follow.