Malawi's currency,the kwacha,is overvalued when the kwacha price of foreign exchange rate is:

Question

Quizplus · Accepted Answer

An overvalued currency means that the price of the domestic currency in foreign exchange is too high compared to the equilibrium free-trade exchange rate. This makes exports of the domestic country relatively more expensive and reduces its competitiveness in the global market. As a result, a country with an overvalued currency tends to have a current account deficit, which means that it imports more than it exports. In the case of Malawi, an overvalued kwacha could lead to a decrease in the demand for Malawian goods and services, which would hurt the country's economic growth.

Malawi's Currency,the Kwacha,is Overvalued When the Kwacha Price of Foreign