Downsides of a Hard Currency

Hard currencies are more valuable than other currencies. For instance, as of Nov. 6, 2020, the FX market traded at a rate of 6.61 yuan per U.S. dollar and 73.97 rupee per dollar.56 These exchange rates are detrimental for Chinese and Indian importers but positive for current account balances. A weak exchange rate helps a country’s exporters because it makes exports more competitive (or cheaper) in international commodity and other markets. In recent years, China has faced accusations of manipulating its exchange rate to deflate prices and seize a greater share of international markets.

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