Dollar Vs American Dollar Essay

In the case of a United States (U.S.) wood product company, with a facility and employees in Canada and sales in the U.S., there are facts to consider. Exchange rate risk is a substantial financial risk. Fluctuations in exchange rates between currencies can result in a gain or loss in any business activity or investment. These changes can influence a company’s revenue, income, cash flow, and balance sheet. The primary area currency rate changes can affect is profit margin between sales and cost of goods sold. The exchange rate can correct itself over a period, and it is a matter of whether individuals can ride out the changes. In our case depending on the exchange rate between the U.S. and Canadian dollar can have a dramatic influence on the bottom-line. Currently, one Canadian dollar is worth 72 cents in American dollars, so after the exchange rate if not properly adjusted for could result in lost money (Currency Calculator:

Their ease of conducting business and trading across borders ranks favorably for American consider expanding in Canada (Cubbage et al., 2010). The U.S. dollar because of its strength and purchasing power is attractive to many other countries including Canada. Imports and exports play a vital role in the attractiveness of the dollar. If a wood produced in Canada is less expensive than wood produced in the U.S. imports will escalate, and exports will plummet. These factors result in the U.S. dollar being more or less enticing to consumer and investors at various intervals. Robson & Laidler (2002) explored the possibility of Canada adopting the U.S. dollar as their official currency. They argued it reduces the cost of transactions and improves decision-making in Canada. Each government can print money based on a need to combat events such as inflation and deflation and, in turn, affect the exchange