Economists Worried by Weak Dollar

July 26, 2009 - PRLog -- I am sure you are aware of recent weakness in the US Dollar but just what does it mean to you?

If you are planning a trip overseas, think again. Your dollar is buying less Euros and other major currencies and perhaps it could be worth considering a holiday within the US.  Now that decision will see a positive flow on effect to business at home and that’s certainly not a bad thing.

You may ask just why the dollar is so weak. It has fallen over 10% since mid March, and it is no coincidence that the time the Federal Government announced its plan for aggressive spending to fight the recession was March 18th.  The plan included measures to stimulate the economy such as buying up hundreds of millions of dollars worth of government bonds in an effort to create lower mortgage interest rates. This has served to weaken the US Dollar as traders have sought alternative investments where returns are greater.

A weaker currency will also impact on businesses, as imported products and resources will cost them more, and these increased costs inevitably end up being passed on to the consumer.

These are just some of the far reaching effects of our increasing debt levels brought about by the stimulus packages and the source of concern for economists.

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Antony Wilton writes on currencies and associated topics on his popular site
http://currencytradingpro.com