How do fluctuations in the dollar’s value affect today’s global economy?
The U.S. has the biggest impact on the global economy and its monetary unit value, and fluctuation has the greatest effect relative to other currencies. The value affects company profits, budgeting and manufacturing costs. It has ramifications on capital investment, plant openings and closings. For example, some companies that have outsourced customer service and call centers to India have returned these centers to the U.S., since the weak dollar has eroded the cost benefits of operating overseas. It all underscores the importance of hedging currency risk to help mitigate variances from companies’ forecasts and plans. GARY LOE is vice president, foreign exchange at Comerica Bank. Reach him at (800) 318-9062 or gloe@comerica.com”>href=’mailto:gloe@comerica.com’>gloe@comerica.com.
