I hear this all the time. China artificially decreases the value of their currency by buying up USD to make their products more competitive in the global market. Traveling to Europe is cheaper now that the Euro has gotten slightly weaker. How does this work?
Let’s say Grayboot Dollars are pegged to US Dollars at a 1:2 ratio. If I want to export my product to the US for US$2, won’t I simply price it at GD$1? It’ll cost slightly less in my currency, but that’s to be expected because it’s a powerful, deflated currency. So how exactly does this work?
In: 3
lets say 1USD=1EUR, EU makes a dothat for 2EUR, US company the same dothat for 2USD, all is good doesn’t matter who you buy it from it cost the same 2EUR or 2USD.
Now the EUR drops in value so 2EUR = 1USD, now if an american buy an EU dothat it costs 1USD, and if a European buys a US dothat is cost 4EUR
Latest Answers