Exchange rates impact international trade and investment from "summary" of The Economics of Money, Banking and Financial Markets, eBook, Global Edition by Frederic S. Mishkin
Exchange rates play a crucial role in determining the competitiveness of a country's goods and services in the global market. When a country's currency depreciates, its exports become cheaper for foreign buyers, leading to an increase in demand for its products. Conversely, a country with a strong currency may find its exports less attractive due to higher prices in foreign markets. This relationship between exchange rates and trade flows has significant implications for international trade and investment. A depreciating currency can boost a country's export sector, leading to an increase in economic activity and job creation. On the other hand, a strong currency can harm a country's export competitiveness, potentially leading to job losses and...
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