How as U.S.'s balance of payments affected the value of a dollar?
353475
as we continue to import more than we export and borrow in the world financial markets to do so, the value of a dollar (which is bases on the value of our economy) will continue to decline as it has been doing for the last few years. it's only a matter of time until interest rates creep up to offset those declines. unclear if the declining value of the dollar will also lead to inflation or if the slowdown in our economy due to rising interest rates will offset it.
491558
A country's currency value Vs. another country's currency value is determined by many factors, one is the purchasing demand of one country's currency, in the case of the US Dollar it is so widely popular because many countries rely on it to build their cash reserves, they stock US Dollars in banks so that when they have to pay a loan debt they use that currency, it is also one of the most stable economies, thus the price for 1 USD keeps it's value throughout the world. \n\nWorld economy is changing and now the Euro has more value than the US Dollar, the echange rate is something like 1.30 USD per 1 Euro, the hcines Yuan remains at 8 Yuans per 1 Us Dollar, but in this case the chinese government dictates what the exchange rate is and not the common market value.\n\nStrong economies have strong currency values, weaker economies have weak eschange values in their currency.
640155
It's a little of both.\nThe cost of living has risen constantly over time. This is evidenced by the median prices of all goods. I'm pretty sure that I couldn't live on the $2.74/hr which my first job paid me!\nBut our dollar value has dropped, too.\nThere was a time when the U.S.Dollar was the highest standard in currency. However, with Europe uniting the Euro is now much stronger than the dollar. As other nations improve their standards of living, the price of importing their goods also goes up.\nAnd so, the circle continues.
556248
As the value of the dollar falls relative to the Euro, it becomes more expensive as an American tourist in Europe. If you pull 500 EUR out of an ATM in Paris on Monday, it might cost you $550, but if the dollar's exchange rate worsens over the week, that same withdrawal might cost you $565 on Friday. So it becomes more expensive for Americans in Europe. \n\nOn the flip side, a strong Euro means someone traveling from Berlin to New York might actually save money. So a weak dollar encourages foreign spending at American stores, hotels, and restaurants.\n\nSince there are good and bad aspects to a weak or strong currency, the governments' central banks use a number of means to control and manipulate exchange rates, including manipulating interest rates and controlling the amount of money on the market.
274743
Limited effect. Thirty years ago, everyone and their grandmother was saying the same thing when gold was valued only in dollars. \nAfter, other nation started using their currencies, arbitrageurs, speculators made the market so efficient \nthat nothing happenned.\nThey were wrong 30 years ago, they are wrong now.\nBy now, the effect is priced on all financial markets.
324099
When we import products from other countries we spend US currency to purchase them. This money then goes to fuel the economy of whichever country the product came from. (We pay applicable taxes on these products that go to our local city,state and federal government.) If other countries do not buy our products and we keep buying there products this affects jobs and the value of our money. A devalued dollar can work both ways. It will affect US citizens in a negative way and affect foreigners in a positive way. Hopefully the people we trust to keep this balance can manage to keep it in check. I hope this answer puts some light on the topic.
93629
Try the site below. About half way down the page is a calculator for 'relative' value of US dollars
1107240
When someone from country A buys something from someone in country B, person A's money is first converted into the currency of country B, and then the product is purchased. If A buys more from B than B buys from A, the demand for B money relative to A money is greater, and the price of B's currency has a tendency to rise relative to A's currency. Example: the US buys more goods from China than China buys from the US. This makes pressure for the Chinese currency to rise relative to dollars, but the Chinese government prevents the appreciation of their currency relative to the dollar, in part by purchasing US debt, in the form of US government bonds. This keeps the price of their goods cheap.
965341
Foreign Exchange works on the same principles as the stock market really.  There are people whose job it is to buy and sell currency, changing the value of those currencies.\n\nFor individuals going on holiday, the difference is not likely to make too much of a difference, but for companies that deal in multi-currencies, this can make a significant difference to income.  For example, as a company in the UK, with GBP(£) as your base rate, but invoicing companies in USD($)\n\nIf the exchange rate in the month is 1.82 $ to the £:\nOriginal invoice of $5,000 =  £2,747.26\n\nIf the invoice is paid in a later month when the exchange rate has dropped to say 1.78 $ to the £:\n$5,000 = £2,808.99\n\nThe Foreign Exchange Difference results in a gain of £61.73.  \n\nYou can see from this example how much of an impact a small change in exchange rates can have on a fairly small invoice.  If the invoice is much larger and the exchange rate goes in the other direction, money can be lost as well.
395167
Currency is money. It means how much money is worth.
569467
First, go here:\n\nhttp://finance.yahoo.com/currency\n\nOne US dollar is worth .7783 Euro. One Euro is worth 1.2848 dollars. To go from one direction to the other, just divide into 1. So to see how many dollars a Euro gets: 1/(.7783)=1.2848. And in the opposite direction: 1/(1.2848)= .783 Euro.\n\nFrom these currency values, you can see that a US dollar is worth less than one Euro, for otherwise they would trade 1-to-1.  Because currencies like the dollar and the Euro are not priced by the government (well they are in some ways, but typically currencies freely "float" on the free market) these values will reflect the demand for Euros versus dollars. (In some cases the central bank will intervene to change the price of the currency). \n\nThe Euro, since its inception in 1999, has tended to be "stronger" than the dollar. (i.e. you get more dollars per each Euro).  That strength might be cause by both real and perceived factors. Real factors might have to do with balance of payments (trade between Europe and the US) and perceived factors might have to do with people's perceptions about which currency is stronger in the long term.\n\nBecause our US dollar gets us fewer Euros, everything we buy from countries that use the Euro will be more expensive. But the opposite is true for Europeans: they can now buy more with a stronger Euro if they buy imported US goods.  This sets in motion some interesting politics: Exporters like a weaker dollar because Europeans will buy more US goods with their stronger Euro. But this also makes imported European goods more expensive, and that is a disadvantage for importers.\n\nIf I use my dollar and exchange it for Euros so that I buy European equities (stocks), and my dollar drops in value, I also get an economic benefit here. When I sell my European Euro-denominated stocks and convert from Euros to dollars, I will get back more dollars. \n\nMany people make money by following trends in currency prices, although to make money you have to buy and sell very large quantities of currencies- something that most people do not want to risk. Through something call price arbitrage, currencies will generally converge on one price regardless of how many are bought and sold. To illustrate an example:\n\nSay there are 3 currencies, A, B, C. A might be the dollar, B might be the Euro, and C might be the Yen.  If I use A and convert to B, and then take B and convert to C, and finally take C and convert back to A, I should get back approximately the same starting value of A I had.  The same goes regardless of which currency you start out with.  However, sometimes there are minute differences, meaning that when you get back to "A" you might end up having more (or less) than you started out with. The positive difference would be a small profit for you just for converting between currencies.\n\nThere are risks and costs, however. One cost is that every currency transaction has a price. Those who trade in currencies are in business to make money, and they will usually tax you for their services. If you have ever been to a foreign country you will notice that to buy a foreign currency you will have to pay more dollars than you get back when you want to convert the foreign currency into dollars. The difference is the profit that the currency trader makes. A second risk is that currency fluctuations happen fast and in order to make any profit you have to be very quick. You can lose a lot of money by day trading currencies.\n\nIn any case, that should give you a little background on currency exchange.\n\nPS: for 995 Euros: \n\n(995)x(1.2848)= $1,278 dollars.
1077470
From Wikipedia (there is much more at the link I provided):\n\n"A market based exchange rate will change whenever the values of either of the two component currencies change. A currency will tend to become more valuable whenever demand for it is greater than the available supply. It will become less valuable whenever demand is less than available supply (this does not mean people no longer want money, it just means they prefer holding their wealth in some other form, possibly another currency)."\n\n"Increased demand for a currency is due to either an increased transaction demand for money, or an increased speculative demand for money."\n\n"A currency will tend to lose value, relative to other currencies, if the country's level of inflation is relatively higher, if the country's level of output is expected to decline, or if a country is troubled by political uncertainty."
864662
It will affect it very positively, over the long haul, provided the dems get their agenda pushed through at some point. Here is why; basic economics.\n\nFirst off, here is a fact; Despite the "pro-business" mantra of most republican administrations and congresses, and most corporations supporting republican candidates for this reason, the stock market actually does better on an annualized basis under a democratic president or congress.\n\nSecond; the war has been the most obscenely needless expense in the last 30 years. The republicans that were in control seemingly forgot one of the most important republican issue, and THE most important non-morality-issue Republicans stand for. Its the basis of the existence of the party; "Smaller government and lower spending." With the US going the way of Orwell's 1984, suddenly the Democrats were the more fiscally responsible choice to make for people who vote with financial reasoning in mind.\n\nLast; odds are good that the dollar will increase in value against foreign currencies  going forward, as people who have been betting in the dollars continued fall against the world basket of currencies because of bad fiscal policy and continued printing of useless fiat currency to finance the war, will likely cover their bets, bringing some value back as people grow more positive the reckless spending will stop. See, to finance the war, the government has been printing money as if that has no effect on the value of our currency, and they do this in the form of debt, (not actual "printing" of hard currency, but for the sake of argument, we'll call it "printing") effectively decreasing the value of a dollar for every dollar they "print". As the perception grows that the war will end sooner rather then later, and the Dems will reign in reckless spending and, even if necessary raise taxes to ensure we stop borrowing from ourselves, the value of the dollar will increase, as there will be less and less of them for every dollar that gets paid off, even if its just on paper.\n\nAnd because of market speculation, this will begin to happen well before any change in policy actually occurs. \n\nFinally, because of the increasing value of the dollar, it will be able to purchase more on the world market, bringing down commodity prices for oil, gold, and anythign else we buy from other countries to keep our country running. Cheaper commodities means more money in consumer and coproate pockets, which means more spending, and more purchasing, and less consumer debt, which in turn causes more wealth creation. A dollar can be spend a hundred times and taxed a hundred times, and still be a dollar. But that dollar brought in more revenue the more it was spendt. More revenue = stronger nation = better economy overall. Plus, if history holds true, people's retirement and investment portfolios will see better increases, creating more wealth and a better standard of living for retirees, as well.\n\n\n********Edited: On a side note, I must say I'm surprised that somebody gave my answer a thumbs down *and probably more to come now) --- y answer is derived from *actual* facts and historical data, along with a knowledgable explanation which, whether you like it or not, is not an outcome I predicted because I hate republicans, or love democrats, or both, (as those are all not true, I hate the concept of the political party altogether,) but rather assembled using an understanding of macroeconomic policy, with at least enough education behind my answer to explain why in the grand scheme of things, this change is more likely to be good then bad. You people are so partisan it absolutely makes me vomit.
1019477
The currency value of a country is estimated due to that country's gold reserves ( Who was created by US after the ending of World War II ).\n\nSorry, I cannot answer your second question since I don't know the answer.
1002399
The dollar is in fact losing value. The dollar by itself is worthless unless it is used to buy things, correct? Well aren't the costs of homes, fuels, raw materials, and labor going up? Energy is up 45%, Health care is up 22%, College tuition is up 18-30%, commodities are up 16%, housing is up 12% over just last year, 2005, and the year isnt over yet. By the way, gold is up 145%, and gold is supposed to be the standard of our currency. Expect prices to keep rising, it is inevitable, because of not only the reasons you stated, but because of the cumulative effect of rising prices, the economy will further slow, and unions will demand even higher wages, more people will become unemployed, and more people will be on welfare, which further hurts the value of the dollar because the government's solution to inflation is to just keep printing money and giving it away, or raise taxes, rather than cut spending and borrowing. We are headed for a recession, and even if we address the issues directly, the economy will suffer because all of the prices you are accustomed to should be much higher than they are right now in order to match the real value of the dollar, which is lower than what is currently reflected by the market.\n\nTo put it simply, the dollar is overpriced right now, and the only reason why it's not worse is because the government is printing money to keep up with inflation, which will eventually devalue the dollar in foreign markets, which means all of our imports (we import wayyyy too much stuff) will become far more expensive than they are now. This will hurt the wal-mart crowd more than the rich folk who already have sold thier dollars for foreign currency and have invested in gold and silver.\n\nIt's only going to get worse, because politicians are too busy looking out for themselves than our nation's economy. Both Republicans and Democrats are to blame, because neither group is really confronting this issue.\n\nNot a big issue? Try saying that when your rent goes up 100% in a couple years, and your wages increase by a dollar an hour during that time (all of us low wage earners, I mean). Also, expect $3.50+ at the gas pump, and your electric bills to continue to go up.
1090972
Currencies fluctuate based upon supply and demand. When there is great demand for a currency (due to increased transaction demand for money, or an increased speculative demand for money), the currency value goes up.\n\nThis is closely tied to the GDP of a country and the employment rates. (When people aren't working, they aren't spending money)\n\nGovernments can do things like changing interest rates to manipulate this.\n\nFor instance- Canada's currency has risen because our economy is booming and employment rates are high. The US, on the other hand is in a recession.
845821
Once the military might of the USA is reduced, its dominance in the international trade and the Rule of Dollar as an international currency may also get affected. The current conflict only reflects the inter-connectivity between the military might and the international economic scenario. Coming days are very dicey and  decisive for the whole world.