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strong dollar Finance Definition

A situation in which the U.S. dollar can be exchanged for a relatively large amount of another currency. A strong dollar makes exports relatively expensive because foreign purchasers have to pay more, in their currency, for the goods. Imports are relatively inexpensive because the dollar can purchase a relatively high amount of a foreign currency in order to pay for the goods. A strong dollar occurs when people want to invest in the United States because the financial markets are seen as favorable and providing good returns.

A strong dollar contrasts with a weak dollar, which is characterized by a reluctance to invest in the United States and creates a situation where exports are relatively cheap and imports are expensive.