Liam and Prof. Rowe Dialogue Continues, This Time, Why the Dollar is Weakening Today?
Liam and Prof. Rowe's dialogue continues. This time, they discuss why the dollar is weakening today. It serves as a simulation for basic training in economics. Liam: Professor Rowe, can I ask you another question? Prof. Rowe: Absolutely, Liam. What's on your mind? Liam: You know how we've talked about tariffs usually strengthening a country's currency because they reduce imports? But I saw yesterday that after the U.S. imposed new tariffs, the dollar actually weakened. Why did that happen? Prof. Rowe: That’s an excellent observation, Liam. Usually, tariffs reduce imports, cutting demand for foreign currencies, and strengthening the local currency. But in this case, several unique factors changed the expected outcome. Liam: Like what? Prof. Rowe: Well, first, the dollar was already considered very strong—maybe even too strong. Investors who see a currency as overvalued start betting it'll fall soon because expensive U.S. products eventually mean fewer exports. Lia...
