Dollar currency - USA Dollar the Greenbuck

The U.S. dollar (USD) (also known as the Greenback or Buck) is the official currency used in the United States of America. 85% of all currency transactions across the word involve the US dollar. It is the world's primary reserve currency and 25 different currencies are pegged to the US dollar.

The dollar's value refers to the purchasing power of the dollar versus other currencies, or the exchange rate between the two currencies. When the dollar is strong, foreign goods are relatively less expensive. This can benefit businesses that import raw materials or manufactured goods into the United states, such as Wal-Mart Stores (WMT). A weakening dollar benefits companies with foreign competitors, such as US Steel (X), as their competitors' goods become more expensive. A weakening dollar can also lead to rising interest rates, as investors require higher rates to compensate for the added currency risk. Higher interest rates, in turn, have significant consequences for the housing market and business investment in general. A strong dollar means lower oil prices, as the US purchase much of its oil abroad. As the dollar weakens oil producers charge more to protect their margins.

Companies that benefit from a rising dollar


    * Companies that export goods to the United States will benefit from a stronger dollar. This is because a strong dollar makes foreign goods relatively inexpensive and so increase US imports. This applies to companies like Volkswagen and DAIMLERCHRYSLER AG (DCX) and EADS NV which all sell foreign cars and airplanes to the US.
    * Companies which use foreign goods extensively as inputs or for retail will also benefit from a rising dollar. This means that companies like Wal-Mart benefit from a stronger dollar as it makes it goods that they buy in China and sell in the U.S. relatively cheap.

Companies that benefit from a falling dollar

    * As the dollar falls, US exports become relatively less expensive; therefore making them more attractive to foreign investors and consumers. This means that companies like Boeing, 3M Company (MMM) and other exporters which sells a substantial portion of its products to foreign customers stand to benefit.
    * As the dollar falls, travel to the US becomes less expensive for foreigners and foreign travel becomes more expensive for US residents. The Walt Disney Company which operates two theme parks within the US will benefit from increased foreign tourists. Marriott International (MAR), Hilton Hotels (HLT) Starwood Hotels & Resorts Worldwide (HOT) are all US-based hotels which will face increased foreign tourism caused by a weakening dollar.

    * US Steel (X) and Nucor (NUE) compete directly with foreign Steel producers. A weakening dollar helps this companies compete. Harsco (HSC), also operating in the steel industry and in many international markets, benefits greatly from a falling dollar.

    * Advanced Medical Optics (EYE), which gets 58% of revenues from outside of the United States, benefits from a falling dollar, which makes its exports more competitive