how do i get an answer on 'the inplications of weak currency'?

Answer 1

When a currency is weak against another currency, imports are more expensive but other countries are more likely to import due to them getting better value. It's more expensive to important components, however, and if you go on holiday, for example, your money will buy you less abroad, but foreign tourists will be attracted by favourable exhange rates.

Is a weak currency a bad thing in itself?

Not necessarily. Take the pound and the Euro.

The days of euro triumphalism are over. Many manufacturers actually welcome a falling exchange rate because it makes their products cheaper abroad and therefore boosts exports.

In Germany and Italy - whose weaker-than-expected economies have been partly to blame for the euro's fall - a weak currency is exactly what they need.

In Britain it is the opposite - a strong pound has been a major headache for exporters for nearly two years. It makes our goods expensive and our shores expensive to tourists.

Answer 2

Weak currency (low currency relative to other countries) discourages importing (since foreign goods become more expensive) and makes it easier to export goods and services (since they now seem cheaper to foreign buyers, since their dollar (or whatever) goes further in your currency. So it stimulates the domestic economy, encouraging job growth and expansion of production. This is good ....

The downside is that although weak (or weakening) currency stimulates the economy, it also means that everyone in the country is a little poorer. They can afford the same amount of domestic goods as before, but fewer foreign goods, since they are now more expensive. So a weakened currency trades off national buying power for a boost to economic activity.

You could argue that a steadily weakening currency insulates exporters from the need to become efficient. Rather then cutting costs etc to compete with foreign producers, they compete on the basis of low currency. In the short run, this may seem fine - the 'bloated' companies have lots of employees etc ... what's bad about that? Well, what's bad is that in the long run, if companies become more efficient, the people they would have hired and didn't (or the people they lay off) will find other work. So the entire country in the 'efficient' stage produces more goods and services, and the average person is therefore richer. The inefficient economy may seem less painful initially, but is poorer in the end.

Answer 3

China and Japan intentionally devalue their currencies because of the fact a great share of their economic gadget is in step with exports to North u . s . and Europe. this allows chinese language and jap to be far greater aggressive than American or ecu businesses. A vulnerable dollar is undesirable for the US because of the fact the US is a considerable importer and a vulnerable dollar makes imports greater costly. the main awesome on the 2d being oil.

Answer 4

The main implication is inflation, where you could have all the money in the world and not be able to afford a loaf of bread.

Answer 5

Think - international trade, advantages, disadvantages, imports, exports, labour market etc

Answer 6

I would love to help but i have not got a clue what you are talking about...!!

Answer 7

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