On Friday, Alan Greenspan warned that two of things that are weakening the dollar - trade deficit and budget deficit - need attention. How does the weak dollar affect us? Rates increase with a weak dollar, meaning the cost of money can affect both us as a consumer and our businesses. Weak rate also lead to a decrease of domestic competitions because goods can be produced cheaper overseas. More imports from Americans can make the problem even worse because it will lead to a larger trade deficit. U.S. companies that buy raw materials and parts overseas will see costs rise in dollar terms. But if they can't raise prices for their products, it could cut into profits and perhaps, hiring. The weak dollar has also hit U.S. consumers by putting upward pressure on oil prices.
Although there are plenty of negative affects from a weak dollar, there are a few positives. Such as, companies that sale overseas have a more competitive market and may see an increase in sales. U.S. tourism is another industry that can increase. Foreigners are more likely to visit since their currencies can buy more here, and U.S. vacationers who might travel abroad are more likely to stay home if dollar weakness makes overseas travel too expensive.