International trade relies on stable currency values from "summary" of International Money and Finance by Michael Melvin
Stable currency values play a crucial role in facilitating international trade. When currencies are volatile, businesses face uncertainty in their transactions. This uncertainty can lead to increased costs and risks, making it harder for companies to engage in cross-border trade. For example, imagine a U. S. company that wants to import goods from Europe. If the euro's value suddenly decreases against the dollar, the U. S. company would have to pay more for the same amount of goods. This sudden increase in costs could disrupt the company's supply chain and erode its profit margins. Conversely, if the euro's value increases against the dollar, the European supplier may find it harder to sell their goods in the U. S. market. This could lead to a decrease in demand for European ...
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