Loading the player...
A:

The two terms, weak dollar and strong dollar, are generalizations used in the foreign exchange market to describe the relative value and strength of the U.S. dollar against other currencies.

A strong dollar occurs when the U.S. dollar has risen to a level against another currency that is near historically high exchange rates for the other currency relative to the dollar. For example, the exchange rate between the U.S. and Canada has hovered between 0.7292 CAD/USD and 1.0252 CAD/USD, if the current exchange rate is at 0.7400 CAD/USD, the American dollar would be considered weak and the Canadian dollar strong. A strong U.S. dollar, on the other hand, is one that is trading at a historically high level, such as 1.1000 CAD/USD. (For a real-world example, see: Trump Comments Trigger U.S. Dollar, Bond Yield Slide)

The terms strengthening and weakening have the same context but refer to the changes in the U.S. over the period of time being mentioned. A strengthening dollar is one in which the U.S. dollar has increased in value compared to another currency. This means that the U.S. dollar now buys more of the other currency than it did before. A weakening U.S. dollar is the opposite as it means the U.S. dollar has fallen in value compared to the other currency - making the U.S dollar buy less of the other currency.

For example, USD/NGN is 315.30 i.e. 1 USD = 315.30 NGN. If this quote drops to 310.87, the US dollar would be said to have weakened and the Nigerian naira would have strengthened since 1 USD gets you less naira than before.

The terms strong, weak, strengthening and weakening can be used to refer to any currency.

RELATED FAQS
  1. How are international exchange rates set?

    International currency exchange rates display how much one unit of a currency can be exchanged for another currency. Currency ... Read Answer >>
  2. What happens to the US dollar during a trade deficit?

    Learn what happens to the U.S. dollar during trade deficits. Trade deficits happen when imports exceed exports leading foreigners ... Read Answer >>
  3. If a country's currency is determined by the strength of its economy, why isn't the ...

    Generally speaking, when Country A's currency is worth more than that of Country B, it does not necessarily mean that Country ... Read Answer >>
Related Articles
  1. Trading

    Play Foreign Currencies Against The U.S. Dollar And Win

    Don't panic when the dollar drops. Learn to exploit the greenback's decline and profit from it.
  2. Trading

    3 Factors That Drive the U.S. Dollar

    We look at three important factors that affect U.S. dollar value, and how to determine when it's the right time to buy currency.
  3. Trading

    Countries Most Affected By A Strong U.S. Dollar

    The U.S. dollar is still the most important currency in the world. It's used for trade, foreign reserves, and as a substitute for the gold standard. As the U.S. dollar continues to grow stronger, ...
  4. Trading

    The U.S. Dollar: What Every Forex Trader Needs To Know

    The U.S. dollar is by far the most significant currency in the global market. Find out what you need to know if you want to trade it.
  5. Trading

    U.S. Travelers: Book That Trip Abroad Now

    Appreciation of the U.S dollar against the euro and other currencies is making travel abroad cheaper. Here's how to benefit.
  6. Investing

    Explaining Fixed Exchange Rates

    A government using a fixed exchange rate has linked the value of its currency to the value of another country’s currency, or the price of gold.
  7. Personal Finance

    5 Countries Where the USD Is Commonly Accepted

    In these five countries, the U.S. dollar is either the official currency or is used alongside native currencies for transactions.
  8. Trading

    How Do You Make Money Trading Money?

    Making money in the foreign exchange market is a speculative process. You are betting that the value of one currency will increase relative to another.
  9. Trading

    What is an Indirect Quote?

    An indirect quote expresses the amount of foreign currency required to buy or sell one unit of the domestic currency in the foreign exchange markets.
  10. Trading

    How A Strong Greenback Affects the Economy

    The fact that the strong dollar has an effect on the US economy is indisputable, but is the overall impact positive or negative?
RELATED TERMS
  1. Dollar Rate

    The exchange rate of a currency against the U.S. dollar (USD). ...
  2. Dollar Bull

    An investor or speculator who is optimistic about the outlook ...
  3. Reciprocal Currency

    In the foreign exchange market, a currency pair that involves ...
  4. International Currency Exchange Rate

    The rate at which two currencies in the market can be exchanged. ...
  5. Weak Currency

    A currency with value that has depreciated significantly over ...
  6. Cross Currency

    A pair of currencies traded in forex that does not include the ...
Hot Definitions
  1. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  2. Investing

    The act of committing money or capital to an endeavor with the expectation of obtaining an additional income or profit.
  3. Stagflation

    A condition of slow economic growth and relatively high unemployment - a time of stagnation - accompanied by a rise in prices, ...
  4. Notional Value

    The total value of a leveraged position's assets. This term is commonly used in the options, futures and currency markets ...
  5. Interest Expense

    The cost incurred by an entity for borrowed funds. Interest expense is a non-operating expense shown on the income statement. ...
  6. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
Trading Center