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Bottom Dollar?

Weakening U.S. currency could change how you do business.

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This story appears in the April 2005 issue of Entrepreneur. Subscribe »

Whether the U.S. dollar is weak in an absolute sense is up for interpretation. But there's no question that it's a lot less muscular than it was a few years ago. And it's likely to get weaker yet, as Asian countries that have been protecting the U.S. currency--to boost their own exports--will eventually have to back off. In this environment, imported goods become more expensive while American exports become cheaper abroad. Over time, U.S. interest rates also move higher.

What does that mean for your business? If your competition is primarily international, a weakening dollar is nirvana. Whether you actually sell your product in this country or abroad doesn't matter. Relative to those international competitors, you're in better shape. On the other hand, if you import goods and sell them domestically--retailing, for example--then you might find yourself on the pointy end of that particular stick.

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