Is strong or weak dollar better? Strong is good. Weak is bad. These generalizations seem simple enough, but they can be very confusing when it comes to money. Is a “strong” US dollar always good? Is a “weak” dollar always a bad thing? Understanding this is necessary in the market. The terms "strong dollar" and "weak dollar" are a "hot topic" always bandied about daily by economists and also by the public. This issue is so important to almost everyone. It seems to be part and parcel of people who care a lot about currency such as investors, economists, foreigners studying or working in the US, and so on. What do strong dollar and weak dollar mean? Strong dollar is strong relative to other foreign currencies, while a weak currency means the dollar is weaker than other currencies. The terms strong and weak, bullish and bearish, strengthening and weakening, appreciation and depreciation are relative terms in the world of foreign exchange. Recently, the Federal Reserve cut the interest rate in half and another cut by a quarter. Will the rate cut affect the exchange rate? The Federal Reserve's rate cut weakened the dollar. Is the rate cut beneficial for the dollar? The weak dollar, the lowest currency against foreign currency, has no effect on the price of local products they produce in the United States. But they affect the import and export of goods. U.S. businesses find it easier to sell goods in foreign markets. Therefore, imported American goods exert less competitive pressure in keeping prices low. Therefore, a weak dollar benefits U.S. exports by making American goods cheaper abroad. Foreign tourists can afford to travel and visit the United States. When the dollar declines, the purchasing power of foreigners increases. Purchasing power is the amount of value of a good or service compared to the amount paid. So, when the dollar depreciates, the exchange rate decreases. The exchange rate (foreign exchange rate, forex rate or FX rate) is the number of units of a given currency that can be purchased for one unit of another currency. US capital markets become more attractive to foreign investors. Since the dollar is falling, foreign investment in the United States is cheaper. Therefore foreigners take this opportunity to invest in the United States. On the other hand, there are disadvantages to the weakening of the dollar. The weak dollar is bad for American citizens. The weakening of the dollar has increased import prices. Consumers face higher prices on foreign products or services.