by Pete Julius
The U.S dollar has been deflating in value for over three years. Many economists and analysts expect that the dollar will continue to fall. At best, many expect the dollar to become stagnant, mostly due to the U.S. trade and budget deficits. However, significant progress on tax reform and positive headway on fixing the social security system could generate an increase in the value of the dollar. In lieu of the weak dollar, people worldwide have been taking advantage of the situation by seeking alternative solutions.
The weak dollar has had a tremendous impact on tourism. Tourists have been traveling the U.S. not only because it’s less expensive, but because they feel that the U.S. is much safer since September 11, 2001. Tourists are buying everything from clothes to electronics to accessories such as fragrances. International travelers, especially from Europe, have been flocking to the United States to take advantage of lower travel costs and cheaper retail prices on merchandise because European prices are so high. New York has seen a spike in the number of tourists, especially people visiting from England. Las Vegas and Orlando have also seen significant increases in tourism.
Many individuals are taking advantage of our weak currency by getting into currency trading. Like stock day-traders, currency traders take U.S. currency and exchange it into other currencies around the world to make a profit. Currency trading is much more risky than day-trading, but alternatives exist for individuals who want to minimize that risk. Several entities such as Forex.com, Hotspot FX and brokerage houses like Charles Schwab have designed and developed programs geared towards currency trading. Safer options include overseas bank accounts, currency-based mutual funds and foreign bonds, all of which are dramatically increasing in popularity. While the business is very risky, it can be extremely lucrative
As a result of the falling dollar, many U.S.-based businesses are taking advantage of a healthier international marketplace. They are taking this opportunity to improve sales and profits in other countries around the world. Investments into foreign currency, stocks and bonds have skyrocketed into the billions of dollars. The weaker dollar has also made the goods exported out of this country much, much cheaper.
While there’s no predicting exactly what will happen to the dollar in 2005, most experts seem to agree that the dollar will continue to fall or at least hold its present low value. In any case, the plummeting dollar is very discouraging, but like anything else that goes downhill, alternative opportunities can help offset the slide.
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