Why low currency value is bad?
In: 1
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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