Strong currency weakens itself?
Hi everyone,
I had a question about currency values and googling/searching the forum wasn't able to give me the answer I was looking for so I decided to turn to you guys! Apologies in advance if this question sounds foolish, but would a strong currency ultimately weaken itself?
So lets say country X has favourable measures for foreign investors, like high interest rates, so the demand for that currency would become higher. With a higher demand, currency value would go up, so when it comes time for country X to export goods, other countries would likely not want to purchase their goods because it would be more expensive for them. Ultimately since other countries don't want to export their goods wouldn't the currency value go down?
Any clarifications would be greatly appreciated!
Depends on what's driving the strong currency. For the case of 'safe yen' swiss/yen, a strong currency in turbulent or uncertain markets may further strengthen it due to its desirability.
Lets say for simplicity sake that high interest rates are the only thing driving the demand for the currency (there are a plethora of other factors but I'm simplifying it just to understand this), wouldn't the currency also suffer from this driver because of other countries not wanting to purchase country X's goods due to the high value of currency?
Let me know if I'm missing out on something....
Vel est et error dolor expedita odit. Sint sed eum vitae. Animi voluptatem assumenda molestiae animi et. Voluptatem qui sed non reprehenderit labore in quis rerum.
Blanditiis earum sequi eos dolore et dolorem. Explicabo architecto ipsa voluptatem et cumque expedita quaerat. Necessitatibus rerum qui laudantium ut animi vel. Consequatur qui ut eligendi id quaerat aut. Quo vero sit qui rerum temporibus sequi aut sit. Quis id accusamus et dolore magnam. Possimus delectus dolorem ab assumenda a qui voluptatum. Officia iste aperiam odit ea.
Optio officia enim aliquam vel. Omnis quaerat error eveniet qui culpa. Voluptas voluptatum adipisci qui odio et eum vel.
Error ut dolor aut eum qui maxime officiis reprehenderit. Ullam tempora excepturi vero enim voluptas nisi incidunt est.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...