Skip to main content
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0

Barcoo I'm getting lost.

I feel that it is more desirable for a country to have/aim for a high relative currency over the long term. That IMO signals that the economy is strong in relative terms to other countrys.

I agree that currencys flucuate in relative terms to other currencys, some more than others , some always trade higher, while some always trade lower. IMO & in with my limited humble observations whether a currency trades to a higher relative or lower relative price to other currencys is directley influenced by that countrys relative competitiveness. Thus as a countrys competitiveness improves the currency is in effect undervalued causing it to rise in value.

Because this improved competitiveness is causing the dollar to rise relative to other world currency the whole worth of that country increases , everyone/every asset is a bit richer relative to the rest of the world.

This rising wealth has a big effect on the value of everything esp those exporters that are able to benefit fully by it, maintain/increase sales at spot prices, IMO it follows that a country should always aim for a high relative exchange rate. The longer you can keep it high in value the better years & years if you can. Always get the best return you can for you output.

Low exchange means what you sell you get less for in return. Even if you had a large amount of produce you'd have to be careful, your produce been released at such low realtive value is apt to push down that markets value, effectivley lowering your exchange rate further.
I say then that I don't see much advantage to aiming for a low exchange rate.

I think that covers my thoughts on this fully ,if I was misleading or wrong before I didn't have that intention.

JR

Print the post  

Announcements

When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.