As the aftermath of winter holidays, the dollar rises to new levels in comparison with other currencies. However, the U.S. economy will not benefit much from this news. The import prices will drop to the inconvenience of manufacturers. The consumers will rush to take advantage of these small prices. It seems that the victory of President-elect Donald Trump is one of the reasons for the recent changes in the dollar’s history. Thus, manufacturers will pay more for their exports while their foreign earnings will be weaker.
During the past two years, the dollar was already appreciated considerably. However, the outcome of the recent presidential elections together with the decision of the Federal Reserve to raise interest rate made the U.S. currency the strongest in the past 14 years.
This is good news for the American consumer. Now that the dollar rises above all other currencies, the consumers will have a bigger personal budget at their disposal to spend on goods. The stock market soars to higher ground while there is a rising interest in U.S. asset investments. All these factors will contribute to better and stronger returns.
However, a stronger dollar is not good news for international manufacturers. Companies have to rethink their sale strategies for 2017 and concentrate more on cutting costs. 3M Company and United Technologies Company are already mobilizing for a weaker next year than previously anticipated.
Many professionals are putting their hopes in the promises of the President-elect Donald Trump regarding the business sector. Mr. Trump mentioned some of his future decisions to lower taxes and simplify some regulatory burdens. These steps would be enough to fight back the consequences of a strengthened dollar. The focus will be more on domestic sales which will counteract the weaker foreign sales.
However, Donald Trump hasn’t confirmed any of his promises for sure. The expectations are high, and many economic strategists advise their customers to wait and see what it is going to happen. The president-elect is surrounded by great expectations, but only his actions can assure the dollar rises in 2017 too. The Obama administration didn’t succeed to solve the U.S. currency puzzle. It is now up to Donald Trump to regulate the situation and avoid the deterioration of the national economy.
Image source: 1