Declining dollar: Who wins, who loses

NEW YORK (CNNMoney.com) -- With the dollar's further fall all but certain, the winners and losers are starting to come into clearer focus.

The dollar fell sharply against the euro after the Federal Reserve cut interest rates at its policy meeting on Tuesday, extending its decline over the past few years. Since the central bank's action, the euro has continued to set new record highs, climbing above $1.41 for the first time ever Friday.

The dip could prove a big boost for marquee U.S. businesses that operate overseas, such as General Motors (Charts, Fortune 500), McDonald's (Charts, Fortune 500) or Boeing Co. (Charts, Fortune 500), and will see a "windfall" as a weaker greenback increases the dollar value of their overseas sales, says Michael Strauss, chief economist at the fund manager Commonfund.

But maybe the biggest beneficiaries of a weakened dollar are U.S. exporters, as domestically produced goods become cheap in the eyes of foreign buyers.

David Kelly, managing director and economic adviser for Putnam Investments, notes that higher exports will help trim the United States' bloated trade and current account deficits.

"[The dollar] will continue to fall until we see a sea change in the U.S. trade deficit," he said.

How fall will the dollar fall?

Currency experts, such as Ezechiel Copic, a senior currency analyst at IDEAGlobal in New York, are betting the euro will hit $1.45 by year's end.

But a continued drop in the dollar's value against the euro could prompt European politicians and economic officials to demand that the European Central Bank cut its own interest rates to keep the euro in check.

"I think anywhere between $1.45 and $1.50 we will hear some serious pain," said Copic.

In the United States, a battered dollar is certain to contribute to inflation and squeeze Americans' pocketbooks.

A weaker U.S. currency, besides pushing up the price of foreign goods, also drives up the price of commodities priced in dollars, such as oil, which has a big impact on consumer spending by Americans.

But a weaker dollar will also hurt overseas businesses. Companies that export goods to the United States may not only face weakened demand, they could also suffer tighter profit margins.

Commonfund's Strauss believes that many foreign firms have probably already accounted for the dollar's recent decline in their financial forecasts. Still, he warned, many of them will struggle - threatening economies overseas.

"That might be more important than our inflationary effect," he said.