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It has to do with exchange rates. Consider the US and Canada. If one US dollar is worth $1.50 Canadian, then US dollars buy 50% more Canadian products than an equal number of Canadian dollars would. But if the value of the Canadian dollar rises, so that it is worth the same as an American dollar, then American dollars buy only the same amount of Canadian products as an equal number of Canadian dollars.
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When a nation's currency appreciates how is trade with other countries affected?
When a nation's currency appreciates, its relative value rises in comparison to other currencies. This will make imports relatively cheaper, as the higher buying power of the currency means more goods can be bought for the same amount. Conversely, exports drop because domestic goods are more expensive when purchased with foreign currency.
How does the interest rate in a country affect equilibrium currency prices?
If a country raises its interest rates, its currency prices will strengthen because the higher interest rates attract more foreign investors. This answer sounds exactly logical as I think about it, yet, in economics books, under the uncovered interest rate parity model, a country with a higher interest rate should expect its currency to depreciate. I would agree with this proposition in the long run an expensive currency will hurt exports... but in the very short run... let's say once the CB declaires a rise in interest rate, by how much should one expect the currency to appreciate? is there any formula for this?
Advantages and disadvantages of currency devaluation?
Advantageincreases supply of exports in response to higher demand without increasing the price. Since currency is devalued and difference between currency value of country where supplies are exported and currency of import country are fairly large. Hence supply will fetch more money to countryDisadvantageIn case of import of inelastic demands, importer, having currency devalued, has to pay more money to foreigners. Hence discourage inflow of goods and services to country.Prateek Caire
Does inflation affect exchange rates?
Simply put, low inflation rates means higher demand in market including demand from foreign markets. This is translated in the price quoted for imported items. Thus, as import is increased so does money outflow. This means more foreign currency are needed (bought) to buy imported items and relatively the value of local currency rates will be depreciated.
Explain how exports can be greater than a country's GDP?
gdp includes consumption, investment ,govt spending and net exports.......the last term i,e., net exports is nothing but (exports-imports) .so if imports are far higher than exports then it can make the term gdp less than the term exports .....countries having heavy import based economy will have this anamoly.....especially small countries like singapore luxembourg have this feature....
When a nation's currency appreciates how is trade with other countries affected?
When a nation's currency appreciates, its relative value rises in comparison to other currencies. This will make imports relatively cheaper, as the higher buying power of the currency means more goods can be bought for the same amount. Conversely, exports drop because domestic goods are more expensive when purchased with foreign currency.
How does the interest rate in a country affect equilibrium currency prices?
If a country raises its interest rates, its currency prices will strengthen because the higher interest rates attract more foreign investors. This answer sounds exactly logical as I think about it, yet, in economics books, under the uncovered interest rate parity model, a country with a higher interest rate should expect its currency to depreciate. I would agree with this proposition in the long run an expensive currency will hurt exports... but in the very short run... let's say once the CB declaires a rise in interest rate, by how much should one expect the currency to appreciate? is there any formula for this?
Advantages and disadvantages of currency devaluation?
Advantageincreases supply of exports in response to higher demand without increasing the price. Since currency is devalued and difference between currency value of country where supplies are exported and currency of import country are fairly large. Hence supply will fetch more money to countryDisadvantageIn case of import of inelastic demands, importer, having currency devalued, has to pay more money to foreigners. Hence discourage inflow of goods and services to country.Prateek Caire
What are the effects of balance of payments in relation to Zimbabwe?
If your country has higher level of inflation than major trading countries, the exports will be expensive and imports will be cheaper. Country's balance of trade will be affected and ultimate effect will be on the rate of exchange.
Which country's currency is higher in the world?
dubai
Nigeria and Ghana who has the highest currency?
The Nigeria currency is higher eg:Nigeria #1 is equal to Ghanian 121.4
Why Pakistan import is higher than exports?
idiot if i had known it i would never had come to this site
Does inflation affect exchange rates?
Simply put, low inflation rates means higher demand in market including demand from foreign markets. This is translated in the price quoted for imported items. Thus, as import is increased so does money outflow. This means more foreign currency are needed (bought) to buy imported items and relatively the value of local currency rates will be depreciated.
Explain how exports can be greater than a country's GDP?
gdp includes consumption, investment ,govt spending and net exports.......the last term i,e., net exports is nothing but (exports-imports) .so if imports are far higher than exports then it can make the term gdp less than the term exports .....countries having heavy import based economy will have this anamoly.....especially small countries like singapore luxembourg have this feature....
Can you purchase a currency converter from any store?
The higher quality currency converters can only be bought online. However BestBuy offers and decent currency converter in there stores.
What does a country experience when the total value of exports is higher than the total value of imports?
they will fell differentthey will
Why Canada is more expensive than US?
Because the tax rate is higher so we have better roads and public services. But is still a lot lower then most places in the western world.
