What have you always wondered about the economy? Tell Us

Why a strong dollar’s a dud for indebted foreign firms

Stan Alcorn Dec 8, 2014
HTML EMBED:
COPY

Why a strong dollar’s a dud for indebted foreign firms

Stan Alcorn Dec 8, 2014
HTML EMBED:
COPY

The dollar is super strong right now.  It’s up 11 percent against the euro, and 16 percent versus the yen.

That’s good news for Americans who want to spend their money abroad. It’s even better news for foreign companies who want to sell their stuff to us. Except for the ones that borrowed money in dollars  which is a lot of companies over the last few years.

Those companies have to pay interest in dollars on those loans, but they get paid locally in their own currency. So, as the dollar rises, they have to pay more local currency to buy the dollars to service their debts. There’s a big risk here, if companies start to default on those loans, or, worse go bankrupt. It could present a threat to their host countries, and maybe to the entire economy.

Marketplace is on a mission.

We believe Main Street matters as much as Wall Street, economic news is made relevant and real through human stories, and a touch of humor helps enliven topics you might typically find…well, dull.

Through the signature style that only Marketplace can deliver, we’re on a mission to raise the economic intelligence of the country—but we don’t do it alone. We count on listeners and readers like you to keep this public service free and accessible to all. Will you become a partner in our mission today?

Your donation is critical to the future of public service journalism. Support our work today – for as little as $5 – and help us keep making people smarter.