Tuesday, November 16, 2004

The "strong Dollar policy" explained

I have talked about affects of the weakening Dollar on the macro economy few times before. Today I was reminded of why we call it the "Strong Dollar Policy" even though the Dollar continues to weaken. HPQ on its conference call commented that the weaker dollar will help it generate $500M extra next year. Now with $500M extra at the top line and 7% operating margin that translates to $35M extra of operating income and about $7M extra in tax income to Uncle Sam. Imagine the same scenario being played out for almost all big companies and you can understand why they call it a "Strong Dollar policy". Its the policy of Strongly driving dollars to top line of U.S. companies.


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