A weak U.S. dollar cheapens U.S.-produced goods and services versus their foreign counterparts. Over time, a weakening dollar should increase global demand for U.S. goods and services and reduce global demand for non-U.S. output. A strong dollar should have the opposite effects. Chart Three shows that until 2002, the dollar's value steadily rose against most major currencies. The dollar's post-2002 weakening should provide yet more stimulus for the U.S. economy.

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