How Does Currency Oscillation Influence Economy?
July 19, 2018
0 minute read
Currency Fluctuations are very normal. Value of a currency versus another is affected by many factors like the supply and demand of two currencies, current economic status, inflation, deflation, capital flow, interest rate, etc. Factors change, so exchange rate change.
Currency Influences Are Far-Reaching. Many people don’t care about changes of exchange rate because they just focus on domestic currency. When they do some occasional activities like foreign travel, import payments or abroad remittances, they will pay attention to fluctuations of currency. A strong and weak currency has both advantages and disadvantages.
If a nation has a strong currency, it will be cheaper for those who travel to other countries or buy products imported. However, an unduly strong currency can make industries rendered uncompetitive and a number of jobs are lost. A weak currency can boost export and tourism. It brings many benefits.
Changes in currency can have an impact on the economy. Specifically, fluctuations affect merchandise trade, economic growth, capital flows, inflation, and interest rates. In the history of the world economy, currency oscillations impact the economy of nations. You can research the Asian crisis of 1997-1998, China’s undervalued yuan, Japanese yen’s gyrations from 2008 to mid-2013, and Euro fears from 2010 to 2012. Currency fluctuations influence badly not only domestic economy but also world one.
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