NCPA - National Center for Policy Analysis

Advantages Of A Strong Dollar

February 5, 1997

America's present strong dollar is just one more sign that our economy is the strongest on earth and that the U. S. is an attractive place to invest, financial observers say.

Spain's Road Away From SocialismThere was a time when a weak dollar was the goal of policy-setters -- in the belief that it would boost U. S. exports and bring our international trade figures into better balance. But that policy is no longer in fashion, as the Treasury avidly pursues a strong-dollar policy.
  • Since the spring of 1995, the dollar has surged 50 percent against the Japanese yen and 20 percent against the German mark.
  • While this may disadvantage U. S. automakers seeking to sell their vehicles overseas, it has been a boon to American high-tech companies as the cost of their foreign-made parts has gone down.
  • Investors in other parts of the world find dollar-based assets a bargain and capital is being attracted from many countries by our high real interest rates.
  • Other beneficiaries are American tourists and business people traveling abroad -- who find exchange rates advantageous to their wallets.

Source: Perspective, "The Mighty Buck," Investor's Business Daily, February 5, 1997.


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