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As a non-economist, that's one of the basic things about trade that was surprisingly hard to wrap my head around. Your currency is high, that's good because you
by dwater 4y ago
As a non-economist, that's one of the basic things about trade that was surprisingly hard to wrap my head around. Your currency is high, that's good because you now have much greater buying power outside your country! Everyone else's stuff is cheap! Also, it's bad, because it means your stuff is more expensive, so nobody outside wants to buy it, so your exports decline.
Basically it's just: high currency is good if you're importing, bad if you're exporting.
- TheOtherHobbes 4y agoKeep in mind forex prices are all gambling anyway. These prices are the opinion of a relatively small number of people, some of whom - like certain well known banks - have a long record of bad faith price fixing. For example: https://en.wikipedia.org/wiki/Libor_scandal https://en.wikipedia.org/wiki/Libor_scandal
- blibble 4y ago> These prices are the opinion of a relatively small number of people complete rubbish, FX is the most liquid and actively traded instruments there are
- neilpanchal 4y agoYes. > In terms of trading volume, it is by far the largest market in the world, followed by the credit market. Furthermore: > Trades between foreign exchange dealers can be very large, involving hundreds of millions of dollars. Because of the sovereignty issue when involving two currencies, Forex has little (if any) supervisory entity regulating its actions. https://en.wikipedia.org/wiki/Foreign_exchange_market https://en.wikipedia.org/wiki/Foreign_exchange_market
- wyager 4y agoTotal nonsense. Forex markets are extremely liquid; narrow and deep. Right now, I could exchange 3M USD for euros (or vice versa) and not even move the price by $0.0001.
- systemvoltage 4y agoOTOH, intuitively, as EU G&S get's cheaper, the market demand for EU G&S spikes, driving the prices up to a different equilibrium than before. It exasperates shortages in EU with secondary/tertiary supply chain effects slogging down the economy. One anecdotal example is Czech based JetBrains. They announced a few days ago that they're increasing subscription prices. I presume, they have a huge sales numbers in the US. I really don't understand macro-econ on this scale, Bloomberg article is good, but would be fascinating to read deep analysis of pros and cons.
- frumper 4y agoThat’s true and it does become harder to purchase US goods, but the US isn’t exactly the country you try to import from for cheap goods. Much of the appeal in US goods is either in brand or perceived quality.