If a raise in currency value causes a manufacturer to lose sales why can't they just lower prices.?

Question

Maybe I'm missing something but it seems economists seem pleased when our currency stays lower as they say it helps manufacters to sell their goods then talk of a slow down in sales if currency gets higher. Why can't they just lower prices to keep the goods moving?

Answer 1

First lets review the basics:
Home currency increases which results in a slower sales in Foregin currency. Reducing the sales price in the foreign currency would reduce the prices there and increase sales, however, when translated back into the home currency the profit margin would be lower (greater sales at lower prices). The company, if pricing competitively, would risk producing a good at a lower profit margin which could impact lending/equity decisions.
The company would have to run more efficiently to offset any reduction in margins.

NOW, lets take the real world.
Again same premises, however, goods are manufactured in a third country and shipped directly to the foreign country. Revenue is reported either in the home country's currency or foreign currency depending upon GAAP and management. The change foreign currency could also be hedged to a certain extent.
We must also consider the change in rates -- why did it occur: rates change for a variety of reasons to include war, instability in the region, economics (including interest rate differentials). If we assume that the currency changed as a result of the home currency increasing its interest rates or the foreign currency lowering their rates, this could also impact potential outcomes and decisions. Essentially, real world, there are numerous moving factors, but a basic understanding is required in which to formulate decisions in a multi-variable state.

Bests.

Answer 2

Fluctuating currency values have an effect on international trade. If a company loses sales in one country, the sales force will be looking to make up the lost sales somewhere else. Currency values change from day to day in the international monetary exchange. Corps could not reprice products that quickly.
Manufacturers want to sell their products at a profit, or the company will fail. There is no long term benefit in lowering prices. In the short term, all manufacturers are in the same boat, so they can try harder to sell at a higher price and expect sales to drop in a given country.

Answer 3

Because local costs are not immediately affected by currency value changes

Answer 4

Because they need to make money, a lot of businesses run on very tight margins and can't afford to lower prices.

Answer 5

because the manufacturer cannot make profit.