Why low currency value is bad?
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If your money is worth less, it takes more of it to buy simple items. In Germany after WWI was over and the Great Depression hit, the government just printed billions of marks in bills, to the point that paper money became more valuable as fuel for a fire to keep you warm, than they were as currency. People would have to push entire carts filled with coins to the grocery store in order to buy basic food.
Given that, it’s not super surprising how pissed off people were, when a certain man with a silly mustache began rallying support and blaming everyone else for Germany’s problems. There was juuuuuuust enough truth to what he said to gain him a huge following, and the rest was history.
If you buy more than you sell, it’s bad, because you have to pay more money.
If you sell more than you buy, it’s good, because you can sell cheaper and therefore more.
It’s bad if you are at a net trade deficit, because you have to import more than you export, and the net difference has to be covered with more of your own currency when it is worth less.
It’s good if you are at a net trade surplus, because you have to import less than you export, and the net difference gets covered with more of foreign currencies, which are worth less and trade to more of your local currency. Your offerings are cheaper to the world market than those of other countries.
Note: Tourism counts towards exports, mostly.
It’s not. Japan’s yen is 144 times less valuable than the US dollar, but that has no impact on Japan’s economy. Because people are paid 144 times more.
What tends to be bad is volatility or long term depreciation, because then the basics of the currency value are changing in ways that negatively affect people’s savings, trade, things like that.
There are two ways to look at this.
One is from an INTERNAL perspective. Let’s say I am experiencing hyperinflation. The same amount of money buys less and less. If my wages don’t go up the same amount I can afford less and less. That’s bad.
The other way is on a RELATIVE basis. Let’s say money in China (yuan) goes down in value against the dollar. Is that bad? The answer is less clear and complicated. A “weak” currency can be great for a country that sells things to other countries. So China can sell things to the us in dollars, and that buys more and more in yuan.
On the other hand, if the dollar gets weaker against, say, the Japanese yen, then things like Japanese cars and electronics get more expensive for me.
Another example is if I owe you 100 of my own currency. If the value of that currency goes down, then in real terms I owe you less without paying any of my debt down. This is why emerging economies often offer their debt in dollars.
It depends on a lot of things and isn’t straightforwardly “bad”
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