Currency Exchange – The Fall of the American Dollar
The British pound hit a 14-year record in 2007 against the dollar when it reached over $1.99 on currency exchanges.
Consequences of currency exchange hikes
The record rate on currency exchanges of the US dollar against the British pound has consequences home and abroad for private consumers and big businesses alike.
How currency exchange hits home
How does the currency exchange rate of the sliding dollar affect the UK and the USA? According to financial experts, the impact of the sliding dollar will impact on the purchasing power of the dollar. It will suffer when it comes to buying imported goods into the US, although American firms will be able to sell their goods abroad at more competitive prices. It's thought that consumers in America will probably feel the pinch of the poor currency exchange rate on imported goods such as oil – two thirds of which is imported. This has a knock on effect on the cost of transport and heating bills.
Good news for UK shoppers
It is good news if you are a UK resident who wants to shop in America - the currency exchange means you will get more dollars for your UK pounds. But some analysts fear that this could lead to a rise in US inflation - which could cancel out any financial gains from the favourable currency exchange rates.
Currency exchange and the trade deficit
The fall in the dollar however can help reduce the United State's trade deficit - the difference in imports and exports - which is almost $800bn. The currency exchange will make it pricier to buy foreign goods, which provides an incentive for consumers to buy domestic goods, thus helping correct the deficit.
Like all financial markets however it could be affected negatively if US inflation rises - this could cause an economic slow down.
Strong currency rates for the pound
The strong currency exchange rates for the British pound may bode well for UK tourists heading Stateside, but it could be bad for industry. Exporting goods to America will be more costly and American buyers will therefore be more reluctant to buy from UK firms.
The financial future
Whether or not the currency exchange will continue to see the US dollar slide is speculation. It is hard to predict the course of currency markets, which is why many people now turn to currency exchange brokers or specialists if they need to transfer money abroad.
Foreign Currency Exchange Ltd is a commercial currency brokerage based in the UK. We help thousands of clients move hundreds of million pounds across the globe every day. From large businesses to private individuals who wish to send regular payments abroad, you can save money by getting a better currency exchange rate than your bank. The Foreign Currency Exchange buys currency at wholesale rates and can help you save money with our fast secure service. For more information contact us now, telephone +44 (0) 20 7989 0000 or email info@fcexchange.co.uk