The Devaluation of the Dollar

Paper Summary:

The paper discusses how the United States dollar has declined in value in the global economy. The paper examines how this devaluation has caused, and may continue to cause, problems in multiple nations around the world whose economy, at least partially, depends upon the value of United States currency. This paper explores the drop in value of the U.S. dollar, and examines the effects of such a drop on a particular country of interest, that of India. The paper concludes that, for India, the outsourced IT sector and many export industries, such as steel, software, and other goods and services industries, are and will continue to be harmed by the weakened dollar.

From the Paper:

"In addition to simple increases in prices for offshore U.S. companies, many of the IT service contracts and other offshore contracts are being redesigned, in an effort to share the burden of a devalued dollar between the U.S. holding company and the outsourced Indian corporation. By raising prices, but locking in those prices for specific time frames, or by giving a low introductory rate for outsourcing, while including formulas for gradual increases, these outsourcing firms can effectively balance the need for U.S. business with the growing concern over the weak dollar (Thibodeau and Hoffman, 2004)."

Sample of Sources Used:

• Ahya, C. (2004, May 27). Weak dollar implications. Morgan Stanley Global Economic Forum. Retrieved March 21, 2006 from Morgan Stanley. Web site: http://www.morganstanley.com/GEFdata/digests/20030527-tue.html#anchor3.
• Greenburg, G. (2005, Jan 31). Indian summer for sub-continental stocks. The Street. Retrieved March 21, 2006 from The Street. Web site: http://www.thestreet.com/pf/mutualfundmonday/mutualfundmondaygg/10206116.html.
• Jetley, S. (2004, Dec. 26). Impact of weak US dollar, oil price, and World Trade Organization agreement on outsourcing. India Daily. Retrieved March 21, 2005 from India Daily. Web site: http://www.indiadaily.com/editorial/12-26b-04.asp.
• Nwazota, K. (2004, December 6). U.S. dollar hurting tourists and global business. PBS NewsHour Extra. Retrieved March 21, 2006 from PBS.org. Web site: http://www.pbs.org/newshour/extra/features/july-dec04/dollar_12-06.html.
• Ramachandran, G. (2005, Jan. 25). Wisdom of the weak dollar. Business Line online. Retrieved March 21, 2006 from The Hindu Business Line. Web site: http://www.thehindubusinessline.com/2005/01/25/stories/2005012500070800.htm.

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