The U.S. Dollar Is Down; Time for Americans to Export?
One of the advantages of a trip outside of the US, particularly to a place one typically does not visit, is to get a perspective on the U.S. Dollar and its impact on exports and imports. That was one of the thoughts that hit me this week as I spoke with my clients, lawyers, financiers and marketers while in Australia.
From what I can see, hear and read Australia is coming out of the recession a lot faster than the US. The Australian dollar was, just a few months ago, worth roughly 65 cents to the US dollar. It is now nearing parity and some analysts here are predicting it will hit $1.10. That would be a 45 cent swing in value in just a few months; great for Australian imports, terrible for Australian exports.
Australia is not the only country experiencing a rise in the value of its currency versus the greenback. It is happening all over the world. Here is how the New York Times puts it in an October 18th piece entitled “In Dollar’s fall, Upside for US Exports”:
“…a weak dollar could prove beneficial to the American economy by aiding long-suffering manufacturers, rebuilding a stronger industrial base and lifting exports even if it makes life harder for trading partners around the world…”
For American exporters this is of course good news. It means that products made in the US are more attractive to countries like Australia because those goods are suddenly a whole lot cheaper. If the decline of the dollar continues (some predict that the dollar will be worth $1.60 Euro in 2010, we could see manufacturing begin to return to the U.S.
We may be seeing a restructuring of the US economy, a temporary decline or both. I would bet on the latter. As I see it, it is only a matter of time before the big US financial engine revs up and the American dollar gains strength. When that is going to happen is anyone’s guess but in the mean time, if you are a U.S. manufacturer, start exporting.
