Exchange rate

• Exchange rate:

  • the value of the dollar in terms of other currencies

  Businesses are affected by it because:

  • they buy raw materials from abroad
  • they sell their goods overseas
• Companies are concerned about exchange rates as flunctuations can make a difference between trading at a loss or at any profit.
• Strong dollar — need more currencies to exchange for one dollar. Our goods are expensive overseas, lower demand for our exports.

  Weak dollar — need fewer currencies to exchange for one dollar. Our goods are attractive to foreigners as they seem cheaper, our imports are more expensive.