If the value of the dollar decreases, will the demand for U.S. goods increase in foreign markets?

Question

I'm trying to figure out if the trade deficit will balance itself out. Since the value of the dollar is low, won't this attract foreign consumers and investors to buy our products, thus balancing out the trade deficit?

Can you reccommend any sources or articles to read as well please?

Thanks for your help.

Answer 1

NO ONE WANTS OUR AMERICAN MADE TRASH.

h**l, WE DON'T EVEN WANT IT.

Answer 2

The simple answer to your question is it should. However where similar goods are manufactured to a similar standard or quality and are manufactured at a cheaper cost and sold at a cheaper price, the result is no.

A lower dollar means those goods that we make exclusively such as say the Boeing Aircraft or military hardware and computer software, will become more competitive. Corporations generally take the opportunity then to book their products and lock them in at that price using an option. If the dollar then say increases in value at a later date, they may instead of taking delivery of that product at the cheaper price booked, on sell it to someone else for a premium or simply let that option expire.

If on the other hand gold producers in Nevada produce more gold,a  drop in the value of the US dollar will compensate for the gold price which is denominated in US dollars with an immediate lift in gold prices. There is a corresponding increase/ decrease in gold/ bond and US dollar values which are intertwined with the fortunes of the other.

As to the other parts of your question, the demand for US dollars as a commodity increases as buyers of products denominated in US dollars like oil and gold will rush to buy US dollars. In doing so they drive up the value of the US dollar.

It all eventually balances out or the Federal reserve will intervene to create conditions for a reduction in any trade deficit that ensues.