23.03.2023 - 21:42

What are the impacts of currency devaluation and revaluation on international trade?

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What are the impacts of currency devaluation and revaluation on international trade?

Answers (1)
  • Finnegan
    April 5, 2023 в 02:55
    Currency devaluation refers to a decrease in the value of a currency against other currencies while currency revaluation is the opposite - an increase in value. Both currency devaluation and revaluation can have significant impacts on international trade. In the short term, currency devaluation can make a country’s exports more competitive as their products will be cheaper to foreign buyers. This can result in an increase in exports and a decrease in imports as it becomes more expensive to import goods. However, in the long term, devaluation can lead to inflation as imports become more expensive, and producers may also face higher costs for imported inputs. On the other hand, currency revaluation can make a country’s imports more affordable and their exports less competitive, which can lead to a decrease in exports and an increase in imports. This may result in a trade deficit and may also affect employment, causing job losses in export-oriented sectors. Overall, currency devaluation and revaluation can have complex and varying impacts on international trade, depending on the specific circumstances and factors at play.
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