2.1.1. Impact of exchange rate fluctuations on exports
* Effect of exchange rate fluctuations on exports:
When the exchange rate falls, the price rise in the domestic currency, the foreign exchange earned
from export activities would decrease, revenues from export activities calculated
shrunk the domestic currency, exports are discouraged or general trends
common is a decline in export activity.
In addition, the rate exchange increases, the currency dropped it a
bright future opens the way for the exporters, foreign currency due to
foreign exchange to be much worse, stimulate
export growth and development provided that the input costs of
manufacturing exports has not increased correspondingly.
* Effect of exchange rate fluctuations on export structure:
For the structure of export commodities, including agricultural products, rudimentary mechanism
seems to be more sensitive to any fluctuations increase or decrease of the exchange rate
than items such as machinery, petroleum ... The reason given
to explain the problems that the elasticity of agricultural commodities,
crude processing for export prices or the exchange rate applied is very high, so this
is the item can be replaced while the elasticity of commodity machines
and equipment, the irreplaceable items as gasoline, oil ... is
very low. Exchange rates that reduced export prices were relatively expensive, these
items are easily replaced first category is removed from the list using
foreign consumer goods and this will take gradually in the
structure of exports. In contrast, when the exchange rate increases, the structure of commodity
exports could become richer due to price competition, an increase in
export sales led the diversification of export goods ...
* Photo Effect of exchange rate fluctuations on the competitiveness of exports:
For the price competitiveness of exports, an increase in the rates of exchange
ruling will make it exports become more competitive due to lower prices ,
vice versa if the currency exchange rates increased immediately reduced prices makes
exports become more expensive relative competitive on price decreases. In the same
markets if the same quality of goods, the general trend,
consumers will use the product cheaper. And assume the cost of production in
the national regulations of the same coin is equal, the country has
reduced rates for their currencies against the local currency price of the larger markets
are competitive on price higher than that of water, water that has the opportunity to develop
more export.
- In a nutshell, the currency dropped in favor of export, the domestic currency price increases
, which would otherwise be detrimental.
- The reduction, increased rate is reduced, the nominal exchange rate, not the real exchange rate, so if a rise in the exchange rate and still make a lower nominal exchange rate, the real exchange rate of the domestic currency is still considered a valuation higher than the actual value, the effect will not boost exports much.
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