Question

Explain why a country might prefer to have a currency with a low exchange rate. Then explain the reasons why a country might want to have a high exchange rate. Be thorough.

Answer 1

A nation will like to have a low exchange rate when it needs to advance exports.A lower exchange rate represents a lower cost of local merchandise and a lower cost builds the intensity of local products on the planet market,increasing their interest.

A nation want to have a cash with high exchange rate in light of the fact that-

To guarantee that imports are less expensive - When a nation's exchange rate is generally higher than other nation, at that point imports can done at less expensive rate. This will bring about sparing of cost.

To guarantee interest in remote cost lesser than before-When outside money is higher our cash then we can put resources into remote cash at lesser worth and the arrival will likewise be higher as our exchange rate is high when contrasted with them.

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