Strong vs weak dollar.

In plain English

Strong and weak describe direction, not health: the dollar is strong when its exchange rate against other currencies is rising and weak when it is falling. A strong dollar lowers the price Americans pay for imported goods and foreign travel, because each dollar converts into more of the other currency. It also makes U.S. exports more expensive abroad and shrinks the dollar value of profits companies earn overseas. A weak dollar flips both effects, helping exporters and raising the cost of anything priced in another currency. Neither state is automatically good or bad, because every move helps one group and hurts another.

01Why it matters

The same exchange rate move that makes a trip abroad cheaper can also make an American factory's products harder to sell overseas, so a household and its employer can feel the identical move in opposite directions.

02The math, step by step

Say a camera costs 900 euros. At an exchange rate of $1.20 per euro, that is $1,080. If the dollar strengthens to $1.05 per euro, the same camera costs $945. The euro price never changed, but the dollar cost fell by $135, about 12.5 percent.

Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.

03What this is NOT

04Receipts

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