Exchange rates affect trade balances from "summary" of Principles of Economics by Saifedean Ammous
Exchange rates play a critical role in determining the trade balances between countries. When a country's currency depreciates relative to another country's currency, its exports become cheaper for foreign buyers, leading to an increase in demand for its goods and services. This increase in demand for exports can help boost the country's trade balance by increasing exports and reducing imports. Conversely, when a country's currency appreciates, its exports become more expensive for foreign buyers, which can lead to a decrease in demand for its goods and services. Th...
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