Under appreciation of foreign currency, who will be benefitted? |
Importer of domestic country Exporter of domestic country Both of above Neither 1 nor 2 |
Exporter of domestic country |
Appreciation of foreign currency in terms of domestic currency implies deprecation of domestic currency. It is beneficial for exporters of domestic country. Say, 1 dollar = 50 rupees and an item costs 50 rupees. So, Americans will pay one dollar only. Now if us dollar appreciate, that is, one dollar is now = 100 rupees. So now for an item still costing 50 rupees, Americans will pay half US dollar. So goods of India become cheaper for people in US and hence demand for Indian goods will increase in US. This will lead to increase in exports of India. The reverse will happen for importers. Depreciation of domestic currency is not beneficial for importers. |