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Depreciating currency

  • 20-03-2009 1:00am
    #1
    Arka
    Closed Accounts Posts: 6 ✭


    A depreciating currency may give a boost to exports, how may it actually cause long term damage to that countries economy?


Comments

  • #2
    Delta Kilo
    Registered Users, Registered Users 2 Posts: 1,212 ✭✭✭Delta Kilo


    not quite sure what you are asking here but it is kind of irrelevant anyway because Ireland cannot devalue the euro. It is a great economic tool though and is benefiting the UK. A currency gets its value by the laws of supply and demand i.e. as price goes up, quantity demanded falls and if quantity (supply) goes up, price falls. The UK are just making more money available so that the value of it will fall. It is not a long term thing so they can limit supply again, pushing the value back up again. They are in control of their currency. They will alter it to suit themselves. It is working. Look at all the people going up the north!


  • #3
    Arka
    Closed Accounts Posts: 6 ✭Arka


    Actually, my question was more for North American currencies like Canadian dollar. I realize that Canadian exports will fall by at least 20% in the next six months. Canadian economy is not expecting any "contribution" to the GDP from the exports. So, will there be a long term damage to Canadian economy due to depreciating dollar while exports fall? And How?


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