From the previous strong dollar advantage, it is to note that when the dollar is strong it would decrease import price. Thus, it would lead to a more disposable income for the American consumers. Disposable income is the total money an individual or household is spending or saving after the deducted income taxes. In addition, the U.S. companies importing raw materials from abroad will have the lower cost of production plus enjoy larger profit margins. However, this article would tell more about advantages in the strong dollar.
The next benefit for the strong dollar would be for multinationals doing business in the U.S. Foreign companies for instance doing many business in the U.S or investing in the U.S. would benefit due to the strong dollar. It means that when they have many sales in the U.S. they could earn more income with dollar currencies. This is actually shown in their balance sheets, because the dollar is stronger than other currencies. There would also be many rewards for companies investing using dollars.
At the very first place, the dollar is actually part of a reserve currency. A reserve currency is a large quantity of currency provided by the central banks and major financial institutions. This is to support financial activities like investment, transactions, international debt, obligations, or domestic exchange rate influence. So, the next benefit for a strong dollar is the support from its status as the world reserve currency. Thus, if many countries questioned the dollar position in the reserve currency, it would become the reason why it should remain as the world reserve currency. Many countries that tend to question dollar position are Russia, China and Iran.
