Good day to all,
in today’s lesson, i will like to touch on how a weaker currency may help a country’s economic health at times.
Lets compare Country A and Country B.
Country A has a weaker currency compared to Country B.
If you are living in Country A, you will likely find consumer goods in Country B expensive and not be as ready to buy.
Now if you are living in Country B, you will probably find consumer goods cheaper than of those in your country. Buying these consumer goods will stretch your money and hence why not?
In reality, consumers and businesses pretty much work this way.
Hence we can say that the country with the weaker currency probably attracts more investments and exports versus the country with the stronger currency.
With the increase in investments and exports, businesses will do well in the country.
The businesses expand and jobs are created. Unemployment rates fall and sentiments becomes positive.
As more people become employed in the country, consumer spending increases and spurs more business expansion.
Knowledge of fundamentals is important in Forex trading and i hope i have shed some light for you today.