When the United States dollar weakens, which is indicated by a drop in its buying power in comparison

to foreign currencies, the financial effects are like ripples on a pond. The degree to which your business
feels this ripple effect depends upon how closely your business depends on the increased price of goods
and services. On a national scale, a weak dollar can boost the gross domestic product during an
economic downturn. Because exported goods cost less, foreign buyers purchase them in greater
amounts. If you’re not in the export business, a weak dollar can negatively impact your company.

Consumer Spending

A weak dollar drives up the price of imported products, many of which line big-box store shelves. This
leads to reduced consumer spending. To compensate for fewer sales, retailers may hike the prices of
other products in an attempt to generate more revenue, which only contributes to the problem. When
consumers tighten their belts, the first industries that take a hit are those that manufacture luxury items
and nonessential products.

Fuel Costs

Gas prices at the pump typically move in opposition to the movement of the U.S. dollar. When the dollar
weakens, the price of gasoline increases because the nation depends, at least in part, on imported oil. If
your business delivers goods or services, or if it depends upon rising utility costs to operate, your
overhead costs increase. You have three choices: pass on the higher cost to the customer, absorb the
higher cost and compensate by cutting quality, or take a financial loss. None of those options is
favorable to business.

Wages

Your employees would probably like a wage increase to offset the higher costs they're paying for
consumer goods. Because you’re paying more for wholesale merchandise as well as fuel, chances are
good that you can’t afford to give your employees a raise. If the dollar weakens more, you might end up
having to lay off good workers or cut their benefits, making you less competitive in the marketplace.

Businesses Impacted by a Weak Dollar

Some types of business feel the financial pinch of a weak dollar more than others, including travel
agencies that sell foreign vacations and businesses that depend on buying foreign goods for resale or for
use in producing other products. Car dealerships that sell imported automobiles, jewelers who depend
upon imported diamonds and retailers who sell coffee, alcoholic beverages, bananas and other
imported goods report lower profit margins when the dollar weakens