How does a weak currency boost exports if the exporting country uses the USD as a “base” currency?
In: Economics
Say you make widgets and sell them for 10SEK. Today that’s 1.14USD. So for 100 USD a foreign buyer can buy 87 widgets. Tomorrow SEK weakens and the fx rate is 10 SEK for 1USD. So the same buyer now can buy 100 widgets for 100USD and presto, you are exporting more.
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