Weak dollar gives exports a boost

July 11, 2008 by Staff Writer

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The US dollar has been declining steadily for six years against other major currencies, undercutting its role as the leading international banking currency.

Everything made in the US from goods to entire companies is near dirt cheap for foreigners and the dollar has lost roughly a quarter of its purchasing power against the currencies of major US trading partners from its peak in 2002.

With inflation rising the American consumer has never had it more tough and the amount of disposable income families are left with each month is getting tighter and tighter. This will of course have a knock-on affect to the amusement industry as consumers think more carefully about where they spend their money.

However for amusement manufacturers involved in the export market the dollar slide has some positives and Franklin Vargo, vice president of international economic affairs at the National Association of Manufacturers welcomes the slide.

"We can see that, when the dollar’s not overpriced, that people around the world want American goods and our exports are going gangbusters now."

Vargo doesn’t see the dollar as undervalued but sees it as having been overpriced in the 90s and what is now happening is something along the lines of a correction. However Vargo does acknowledge that the dollar’s decline has brought a measure of pain to some consumers.

"As the dollar has gone down in value, that has added to the dollar cost of oil - no question," he said. "So having the dollar decline is not unambiguously a plus. That’s why we say there’s got to be a balance - a dollar that’s not too strong and not too weak - a dollar that’s just right and only the market can determine that."

The export market might be an important source of growth when the dollar is weak but it doesn’t add a lot to jobs and doesn’t mean much for the average American household.

The loss of the dollar’s purchasing power and international respect even has some experts worried that the euro might one day replace the dollar as the so-called primary reserve currency.

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