The value of currency is determined through the laws of supply and demand. What I don’t understand is why can’t a country with high imports rate preserve the value of its currency if it also has a high export rate and there’s a lot of demand on its currency as well?
In: Economics
They can, sorta, but it is not necessary. If people want to invest in your country, you can run a trade deficit and still have a strong currency. So you may be better off having an economy worth investing in (property rights, courts, educated people) And of course, if your currency weakens, your exports should get cheaper and you’d export more, but of course you need to have industries that can export in the first place.
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