how a lower currency value isn’t a sign of poor economy like in Japan?
In: Economics
Well lower currency value does mean that you’re getting poorer, since everything that you’re importing from other countries is suddenly more expensive.
So if you’re just producing and consuming domestically, then you’re not affected by the value of your currency. But if you import a lot of stuff from other countries, then you’re getting poorer. However that could potentially be off-set by exporting stuff to other countries.
Japan is, or used to be mostly an exporting nation. That’s how they got their economy going. Other countries can buy stuff cheaper from Japan, which would bring an unfair competition to their domestic producers. But since exporters are a minority, only a minority of exporters will benefit from lower currency value.
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