Imports Are Cheaper
Goods produced abroad and imported to the United States will be cheaper if the manufacturer's currency falls in value compared to the dollar. Luxury cars from Europe, such as Audi, Mercedes, BMW, Porsche, and Ferrari, will all fall in dollar price. If a European luxury car costs €70,000 with an exchange rate of 1.35 dollars per euro it will cost $94,500. The same car selling for the same amount of euros will now cost $78,400 if the exchange rate falls to 1.12 dollars per euro. As the dollar continues to strengthen, the price of imports will continue to fall. Other lower-cost imports will also fall in price, leaving more disposable income in the pockets of American consumers. U.S. companies that import raw materials from abroad will have a lower total cost of production and enjoy larger profit margins as a result.