Importance and Differences in foreign currency exchange rates?
the one 1 asked:
I am trying to understand the importance of foreign currency exchange rates. Why would economists care that today the dollar converts to x amount of Chinese currency for example? Also why would economist care that today the dollar is stronger or weaker in the same day in different countries such as China, Japan or others?
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I am trying to understand the importance of foreign currency exchange rates. Why would economists care that today the dollar converts to x amount of Chinese currency for example? Also why would economist care that today the dollar is stronger or weaker in the same day in different countries such as China, Japan or others?
I am just using those countries as examples, nothing special. I really would like to know.
Thanks in advance
September 24th, 2009 at 5:11 am
Shifting exchange rates affect the costs of imported and exported goods and services, and hence, the profitability of all kinds of different businesses.
That’s the short answer.
If, all the sudden, the dollar gets weaker, we have to trade more of them to get someone else’s currency, and then import oil. So gas’d cost more.
If, all the sudden, the dollar gets stronger, the other people have to trade more of their currency to get the same amount of dollars. So it’s harder to export, because our stuff is now more expensive to the rest of the world. Judah