Very few people get the importance of currency values.  A strong dollar makes imported goods cheaper, and the foreign company gets a price boost without boosting prices.  A weak dollar does the opposite.

The Japanese yen has appreciated lately.  What effect on Toyota?

The annual operating profit of Toyota tumbles by about $400 million every time the dollar's value falls by one yen, the company says. Toyota and many major Japanese exporters had expected a dollar exchange rate of around 105 yen throughout 2008, but it has dipped as low as 90 this month.

$400 million would get my attention.  And this is just one company.  Consider China's 35% undervaluation of the remnimbi, meaning the dollar is 35% overvalued to the Chinese.  This is a deliberate government subsidy there, with devastating impacts on our economy.

When you travel, a strong dollar lets you buy foreign goods, hotels, and dinners cheaply.  A weak dollar makes fish and chips in London more expensive.  The meal is the same price in pounds, but you have to spend more dollars to buy those pounds to pay for the meal.

Economy wide, the impacts of currency manipulation are tremendous.  They are unlawful subsidies, more powerful than most other mercantilist tools.  The best way to level the playing field available is to countervail the currency subsidies.  Here are two bills that do the best job, and should be passed.

H. R. 2942, Currency Reform for Fair Trade Act of 2007

S. 796, Fair Currency Act of 2007

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