Movements in the exchange rate can have adverse effects on importers, exporters, those that lend or invest overseas and those that borrow offshore.

Question

Quizplus · Accepted Answer

Fluctuations in exchange rates can have significant impacts on various stakeholders involved in international trade, investment and borrowing/lending. For instance, a high exchange rate may benefit importers but hurt exporters by making their goods relatively more expensive in foreign markets. Similarly, a weak currency can help local exporters but increase the cost of repaying foreign debt for borrowers. Therefore, it is important for businesses and investors to monitor and manage currency risk.

Movements in the Exchange Rate Can Have Adverse Effects on Importers