Why do exchange rates matter if items have equivalent costs in the respective countries? (more inside)

Question

Say that my country with a currency called “X” has an exchange rate of X10/$1 so 10 X = 1 dollar but a burger in the US is equal to $1 while the same burger in my country is equal to 10 X then why does an exchange rate matter if we can still get the equivalent items just in our own currencies?

In: 7

Answer 1

Because exchange rates are not static.

If your country suddenly starts printing money it’s value goes down, so that 10000000000 X = 1 USD. Your burger can keep its 1X price because meat and bread are produced locally, but your imported iPhone now costs 10000000000000 X because it is imported and it still costs 1000USD.

But what you are saying also exists and is called currency pegging.