Discussion of Forex Trading and Currency Trading

4. When a country’s currency depreciates, who benefits the most and who loses the most?

4. When a country’s currency depreciates, who benefits the most and who loses the most? Consider businesses, consumers and government. If you say businesses benefit, what types of businesses benefit the most? How does a change in the value of the dollar effect consumers? How does it impact prices and interest rates? Who benefits the most from an appreciating dollar? Also consider whether it makes a difference if your discussion involves short run or long run analysis.

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One Response to “4. When a country’s currency depreciates, who benefits the most and who loses the most?”

  1. John M Says:
    December 15th, 2010 at 8:52 am

    When the value of the dollar declines relative to other currencies, exporters will benefit and importers will suffer. Consumers currently enjoy very low prices on Chinese goods due to the value of the yuan being held low as well as lower costs of labor and fewer limits on pollution which reduces manufacturing costs in China as well. The result is that the American dollar can buy a lot more from China than it can for the same item made in the US. If the American dollar declines, we cannot buy as much from China with the dollar, and we come out worse as consumers. We are basically importers under that scenario. Businesses that rely on exports thrive when the dollar declines, as they can sell a lot more to other countries if that country has a stronger currency.

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