Weak Dollar makes US Multinationals smile

The rise of Indian Rupee against Dollar has been nothing but exceptional this year. Today it saw another big jump touching nearly 10 year high. Todays exchange rate of Rupee against the dollar is 39.45 .

I have already mentioned earlier how it has severely affected the small and Big Indian exporters.

Majority of Indian software companies generate their business in US market and with dollar weakening against the rupee, their profits have dwindled. The share prices of these IT companies have been steadily coming down in last few months.

And it is not only against the rupee, Dollar has weakened against all the major currencies worldwide. Infact, this is the first time when Canadian dollar is stronger than dollar.

How does weak dollar affect US Multinationals?

Off course positively! They are happy, as weak currency allows them to price their products more competitively in world market. Computer, Auto and aircraft parts manufacturers are all very happy with this slide. Their profits are growing like never before.

Exports by General Motors, Boeing and other US companies were up 11% in the second quarter from a year earlier, shrinking the nation’s trade deficit in goods for the first half by $14 billion, to $405 billion, and helping the economy weather the housing bust. According to estimates by Goldman Sachs Group, that’s the biggest improvement in 20 years; exports of goods grew more than twice as fast as imports in the first half of 2007.

The million dollar question however, remains:

Is this dollar slide temporary or will it gain back its strength?

Whatever happens, one thing is for sure, the course that Dollar takes will be very important for the future of global economy!