When the dollar can be exchanged for a large amount of foreign currency, benefiting travelers but hurting exporters.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
The U.S. dollar when it is worth more relative to other currencies. Because the dollar is a floating currency, its value varies according to market trends. When one dollar trades for more units of one or more other currencies, it is known as a strong dollar. When the dollar is strong, American travelers are able to go abroad while spending less of their money, but it makes American exports more expensive in other countries. A strong dollar can be disinflationary for currencies pegged to the dollar. See also: Weak dollar, Exchange rate.
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A dollar that is valuable relative to foreign currencies. A strong dollar exchanges for more units of other currencies compared with the units for which it could be exchanged in the past. A strong dollar tends to hurt U.S. firms that rely heavily on foreign sales because the firms' products will cost more in terms of the foreign currencies. Compare weak dollar. See also exchange rate.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.