From the perspective of both domestic importers and domestic exporters who have exposed positions, it is better to have the direct exchange rate increase rather than decrease.

Question

Quizplus · Accepted Answer

For domestic importers, a higher direct exchange rate means foreign currencies are cheaper, which is beneficial as it lowers the cost of imports. However, for domestic exporters, a lower direct exchange rate is preferable because it makes their goods cheaper and more competitive abroad. Therefore, what is better varies between importers and exporters.

From the Perspective of Both Domestic Importers and Domestic Exporters