How does a weak currency boost exports if the exporting country uses the USD as a “base” currency?
In: Economics
Your premise of using USD as a base currency is flawed. That applies to oil, gold and other commodities whose price is more or less fixed worldwide. In this case having a weaker currency is not that big of an edge. Sure, by having a weaker currency you can buy more local stuff with 100USD, but you don’t offer any competitive advantage compared to your competitors.
Where a weaker currency is a real advantage is when you actually make prices in your own currency. Since your currency id weak you can have ridiculously low prices for someone using USD but still good enough in local currency. The downside to that is that if you want to buy a car or an iPhone or anything that is not produced in your country you’re screwed.
Latest Answers