We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

How a weak currency effects exports vs. imports - Research Paper Example

Free
A strong currency is one that can be converted into high quantities of other currencies while a weak currency is one that cannot buy much from a different currency. A country is worse off when its expected future currency is perceived by speculators as becoming weak or falling in value. A weak currency makes the country’s imports more expensive but its exports cheaper, which contributes to the economic crisis if a country is import orientated or has immense debts. The long effect of a weak currency is that it augments the economic crisis and less spending because of high prices of goods. However, anything that one purchases from a foreign country when the currency is strong results in cheaper prices of goods. This research paper seeks to elaborate on the effects of a weak currency on exports vs. imports. According to Rajan and Palgrave Connect (2009), a weak currency boosts export growth by lowering relative prices and increasing the profitability of the manufacturing sector, thus escalating the domestic value obtained from tradable goods. A weaker currency motivates domestic production as exports increases, and this increases job opportunities. On the other hand, a strong currency declines the quantity of exports that a foreigner’s demand and in turn, reduces a nation’s export production. ...
As argued by Bodie, Kane, and Marcus (2011), a low currency makes the imports more expensive but its exports cheaper, and as a result, a nation ends up importing more than it exports. For instance,

Check these samples - they also fit your topic

Cooperative Marketing of Global gadgets imports
Based on this research some of the effective cooperative methods that Global Gadgets Imports should employ in its project are making partnerships with other companies and businesses with similar goals and objectives. By doing this, the company will help establish an effective market line that will oversee its products gain the right reputation and reach to new areas of the market.
3 pages (750 words)Research Paper
International Business: Imports and Exports
International business can be blamed for the big gap between the developed and developing nations. International trade refers to trade between two countries who have agreed to burn trade regulations with regards to the products traded. Ratification of trade tariffs between many countries around the globe has increased competition in the local markets.
7 pages (1750 words)Research Paper
Mexican Trade and Exports
Mexico is currently the third-positioned commercial associate of the US and the next big sale center for US exports. Mexico used $163 billion on US commodities in 2010, and business with Mexico maintains six million employments in the US. This economic worthiness that for several in the US remains “concealed in simple view”.
10 pages (2500 words)Research Paper
Currency exchange futures
Thus, all transactions are through the clearing house and the trading parties do not deal directly between themselves. 1Currency Exchange futures
5 pages (1250 words)Research Paper
Intermediate coporate finance
China is actually too fully dependent on U.S. export markets and proceeds to look for support from the U.S. Treasury bond markets so that it can to invest a major part of its fast increasing stock
11 pages (2750 words)Research Paper
Interrelation with exports in business
This process then motivates increased purchasing by international vendors and consumers. This process has a varying impact on United States businesses. While one would assume that such processes would have a beneficial impact, this is not always the case. One concern is the impact of import costs.
1 pages (250 words)Research Paper
Currency War of China
Currency wars are terms used in referring to the manipulation of currencies with the intention of boosting exports. The term currency war was launched in September 2010 by a Brazilian Finance Minister referred to as Guido Mantega. It was
19 pages (4750 words)Research Paper
How media effects Arab Spring
To protest this action, the man had torched himself alive, and this suicide led to eruptions of protests (Khondker, p. 7). Following many events, the president had to step down. They replaced him, and
7 pages (1750 words)Research Paper
How does financial crisis affect currency
The crisis shook the stock market, brought down consumer spending, made the housing market plummet and caused foreclosures numbers to rise. It caused
2 pages (500 words)Research Paper
Is the Chinese Currency Undervalued
rnment, for instance, has repeatedly raised the issue, noting in one policy pronouncement that the countrys exchange rate is a source of concern and proceeded on warning the world against and only stopped short of calling the country a currency manipulator (Rajagopalan &
5 pages (1250 words)Research Paper
a weak dollar would, in turn, decrease the huge trade imbalance of the U.S. When consumers rely on the imported goods, a weaker dollar would cause more harm than good to a nation. The following appendix explores more on trade deficit, a scenario where the U.S purchased more imports than exports and this has got worse since the 1970s. The weak currency made exports cheaper and this attracted many foreigners to purchase. Retrieved from http://images.mises.org/5928/Figure1.png A weaker currency would boost inflation, interest rates, and the cost of imported capital and, finally, goods. High interest rates limit economic growth as this makes borrowing expensive, which may limit businesses struggling with finances to ask for funds. As a consequence, this makes difficult for domestic firms to expand their business in foreign markets. In 2008, the U.S dollar made butter exports great as the product appealed cheaper to the world market. However, when the dollar strengthened at the end of 2008, the butter price became very expensive to the world market and imports surged (Karadeloglou & Terraza, 2008). A weak currency increases exports by making its goods cheaper in foreign countries. Nevertheless, the currency is good for nations that rely more largely on exports than imports, which tends to attract many to purchase their commodities. An example is Japan that relies more on its exports, and having a weak currency is an added benefit as it increases purchasing power. In sum, a weak currency increase exports since goods produced become more competitive
Cite this document
  • APA
  • MLA
  • CHICAGO
(“How a weak currency effects exports vs. imports Research Paper”, n.d.)
Retrieved from https://studentshare.org/macro-microeconomics/1457919-how-a-weak-currency-effects-exports-vs-imports
(How a Weak Currency Effects Exports Vs. Imports Research Paper)
https://studentshare.org/macro-microeconomics/1457919-how-a-weak-currency-effects-exports-vs-imports.
“How a Weak Currency Effects Exports Vs. Imports Research Paper”, n.d. https://studentshare.org/macro-microeconomics/1457919-how-a-weak-currency-effects-exports-vs-imports.
  • Cited: 0 times

Summary

Weak Currency Effect on Exports vs. Imports 30th, September 2012 Weak Currency Effect Exports vs. Imports While most investors concentrate much on the state of affairs, it is also essential to comprehend what is going on globally…
How a weak currency effects exports vs. imports
Read TextPreview
Comments (0)
Click to create a comment or rate a document
Let us find you another Research Paper on topic How a weak currency effects exports vs. imports for FREE!
Contact us:
+16312120006
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us