Exports of commodities can lead to an appreciating currency that makes it more difficult for the country to export other types of products.

Question

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When a country exports a large amount of commodities, the demand for its currency increases as foreign buyers need to purchase that currency to pay for the commodities. This increased demand can lead to an appreciation of the currency, making other products from the country more expensive for foreign buyers and potentially reducing the competitiveness of those products in the global market.

Exports of Commodities Can Lead to an Appreciating Currency That