Does a Weak Dollar Help or Hurt?

By Anita Campbell - Having just turned on the financial news on TV for a few minutes to check the market, I hear all the talking heads chattering incessantly about fears over the weak U.S. dollar. But what does the "weak dollar" really mean?

Interestingly, for all the talk about currency issues, few commentators take time to explain the implications on anything other than a macro-economic level. What it means to individual businesses on Main Street is rarely discussed.

I find a lot of confusion among small business owners about the "weak dollar." Businesses that import or export, naturally, have a handle on the impact of currency fluctuations -- they have to. But the majority of small businesses do not deal with currency differences directly and so the issue of "weak dollar" or "strong dollar" is one that's outside their experience. Frankly, the whole subject is pretty baffling to most business owners.

So, back to the question: does a weak dollar help or hurt? The answer, if you are a business owner, depends on whether your small business is buying or selling products, materials or inventory, and where it is buying or selling.

Generally, if you are exporting products it is good news. If you are importing materials or goods it is bad news. After that the issue starts getting more complex, because it may also depend on hidden currency costs (for items that have been imported by a vendor you are purchasing from).

I actually wrote about the topic in some depth from the standpoint of a small business. That was almost exactly three years ago, when we also worried over the weak U.S. dollar. The dates are different, the value of the dollar as compared with foreign currencies is even lower now, but the issues are pretty much the same.

And the answer in my article? The answer is: it all depends. Read why: Does the Weak Dollar Help US Small Businesses?

Read also why some think the weak dollar will get weaker.

And read why some feel a weak dollar ultimately hurts all of us.

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Steve Knowles has spent 25 years in business and practice in the UK, but he also worked in the states and the years haven't dulled his way of seeing an alternative view to everyone else, and every day is a new adventure.

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Joel M. Ungar, CPA is a lifelong resident of the Detroit area and a graduate of The University of Michigan. He is a principal with Silberstein Ungar, PLLC, a Top 15 auditor of SEC public reporting companies.

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