weak dollar

A dollar that has relatively little purchasing power abroad and that can be exchanged only for a relatively small amount of foreign currency, such as the Japanese yen, the euro or the Canadian dollar. A weak dollar signifies that imports are increasingly expensive and that exports are inexpensive. Thus, the level of exports tends to rise while imports decline. The dollar may weaken because of government actions, or in response to declining economic conditions, large trade and budget deficits, inflation, or unattractive investment opportunities in the U.S. relative to other countries. A strong dollar, on the other hand, can be used to purchase a larger amount of other currencies and generally makes exporting more difficult.