week 5 indv draft - Hard currency is usually from a highly...

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Hard currency is usually from a highly industrialized country that is widely accepted around the world as a form of payment for goods and services. A hard currency is expected to remain relatively stable through a short period of time, and to be highly liquid in the forex market. Another criterion for a hard currency is that the currency must come from a politically and economically stable country. The U.S. dollar and the British pound are good examples of hard currencies (Investopedia,2008). Hard currency basically means that the currency is strong. The terms strong and weak, rising and falling, strengthening and weakening are relative terms in the world of foreign exchange (sometimes referred to as “ forex ”). Rising and falling, strengthening and weakening all indicate a relative change in position from a previous level. When the dollar is “strengthening,” its value is rising in relation to one or more other currencies. A strong dollar will buy more units of a foreign currency than previously. One result of a stronger dollar is that the prices of foreign goods and services drop for U.S. consumers. This may allow Americans to take the long-postponed vacation to another country, or buy a foreign car that used to be too expensive. U.S. consumers’ benefit from a strong dollar, but U.S. exporters is hurt. A strong dollar means that it takes more of a foreign currency to buy U.S. dollars. U.S. goods and services become more expensive for foreign consumers who, as a result, tend to buy fewer U.S. products. Because it takes more of a foreign currency to purchase strong dollars, products priced in dollars are more expensive when sold overseas (chicagofed,2008). Soft currency
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This note was uploaded on 10/12/2011 for the course BUSINESS 317 taught by Professor Jackhandy during the Spring '11 term at University of Phoenix.

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week 5 indv draft - Hard currency is usually from a highly...

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