Issue:
Evening out the rate of exchange between the U.S. dollar and the euro. Waiting for news on the federal reserve's actions. Watching for decisions from Greece.
Argument:
The value of the U.S. dollar should be raised, and the European Central Bank should maintain their current rates in order to improve American profit in foreign exchange.
What the Article has to Say:
As of right now, the euro is worth about one dollar and ten cents in American money. Greece seems to be staying put in the euro-zone, so many spectators believe that the value of the euro will be raised under the circumstances. But depending on our federal reserve's next steps, that may not be true. Watchers have said that if Greece left the euro-zone, then the federal reserve might want to wait on their plan of putting into effect an interest hike in September. However, according to Steven Englander, a September rate increase is still highly possible at the moment. One other sign of an imminent rate hike is the prosperity of the 10-year Treasury. So far this year it has hit 2.45% which is very close to its highest percentage levels. If the federal reserve does go through with its interest-raising plans in September, then our U.S. dollar will proceed to gain value, and the European Central Bank will not raise their own rates. This news is very good for American companies, consumers, and travelers.
What does this Mean for Us?
For American consumers, the balancing in value of the U.S. dollar and the euro means that imported goods would be more affordable to buy. Therefore, those consumers' marginal utilities would be able to stretch further when purchasing imported items, and the quantity they bought would increase. Of course, this would only be possible because of the benefits that U.S. companies would receive. They would be able to buy and sell with European companies for a larger profit. After that, their cost for input would dramatically decrease which would either allow them to obtain more resources, or further expand their businesses. Then, because of the money saved on resources, they would be able to charge less money to their American buyers, individuals would be more prosperous, and the overall economy would in turn be boosted. For now, it all depends on how and when the federal reserve will decide to act.
