Depreciation of a currency makes it easier for domestic manufacturers to sell their goods abroad and makes foreign goods less competitive in domestic markets.

Question

Quizplus · Accepted Answer

Depreciation of a currency reduces the value of the currency relative to other currencies, which means that prices of exports become cheaper and more attractive to foreign buyers, while imports become more expensive and less competitive in the domestic market. This can increase exports and decrease imports, leading to a trade surplus and a boost to the domestic economy.

Depreciation of a Currency Makes It Easier for Domestic Manufacturers