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Supply Chain Graphic of the Week: Soaring Value of the Dollar Hurting US Manufacturing



Increases US Buying Power, but Makes Foreign-Made Goods Cheaper to Import


Oct. 13,  2022



Is it good or bad the US dollar is soaing in value again most other US currencies?


As seen in the chart below, since the start of the year, the dollar is up big against the yen, pound, Euro, yaun and swiss franc:




Source: Wall Street Journal


At one level it's good new, as it means the US has more purchasing power for the same dollar amount for foreign goods. It should also act as a break against inflation - though that doesn't seem to be working so well.


But a strong dollar also hurts US manufactuters, making foreign-made goods cheaper to import, while exports of US.-made goods become more expensive for foreign buyers. For US manufacturers operating overseas factories, their sales in foreign currencies are worth less in dollars now because of the unfavorable exchange rates caused by the strengthening dollar.


But in general, SCDigest is for a strong greenback.



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