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The euro has risen above 90 pence for the first time this year. Is that bad? Thu, Aug 9, , Laura Slattery. Weak pound, strong euro. Cross-border shopping A weaker pound means people in the Republic can get more sterling for their euro. Home energy upgrades are now more important than ever. The Dublin start-up making the future better with an appreciation for innovation.
Funds Tracker Keep up to date with your investments. Latest Business. Clanwilliam to introduce AI-powered dictation software for healthcare Profits up six-fold at Jellybean Factory Suppose a brewery in England is interested in selling its Bass Ale to a grocery store in the United States.
We can conclude that from the perspective of U. This leads to a decrease in U. Scenario 3 : How does a weaker dollar affect U. A weaker dollar means that their trip will cost more, since a given expenditure of foreign currency e. The result is that the tourist may not stay as long abroad, and some may choose not to travel at all. Scenario 4: How does a weaker dollar affect foreign tourists traveling to the United States? Consider that, for the foreign tourist to the United States, a weaker dollar is a boon.
It means their currency goes further, so the cost of a trip to the United States will be less. Foreigners may choose to take longer trips to the United States, and more foreign tourists may decide to take U.
This should decrease the amount of U. Foreign investors in the Unites States will have the opposite experience. Since foreign currency buys more dollars, they will likely invest in more U.
At this point, you should have a good sense of the major players in the foreign exchange market: firms involved in international trade, tourists, international financial investors, banks, and foreign exchange dealers. The next section demonstrates in more detail how the tools of demand and supply can be used in foreign exchange markets to explain the underlying causes of stronger and weaker currencies.
But do not let the terminology confuse you. When a currency becomes stronger, so that it purchases more of other currencies, it benefits some in the economy and injures others. Stronger currency is not necessarily better, it is just different.
Watch this video to practice analyzing the impact of shifters on supply and demand in the foreign exchange market.
Practice until you feel comfortable doing the questions. Improve this page Learn More. Skip to main content. Module Exchange Rates and International Finance. Search for:. Strengthening and Weakening Currency Learning Objectives Describe the exchange rate when a currency increases in value and a currency decreases in value Identify who benefits from a stronger currency and benefits from a weaker currency.
Try It. Get in touch with Universal Partners FX and their dedicated team to discuss these factors in further detail and be kept up to date with the latest market movements ahead of your currency exchange.
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Back Account Login Personal Business. Online platform Sign Up. Personal Business. Improved market sentiment has helped push the pound higher against the euro and the US dollar, despi Sterling has fallen after the release of weak UK data, and is trading lower against both the dollar User Menu Home Log in.
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