Answer to Question #148905 in Macroeconomics for Ayesha

Question

US dollar has recorded a jump of 5.50 paise per dollar (p/$) in the last one month; this situation might bring smiles and sorrows to different types of traders (exporters and importers).’’ Justify the given statement

Answer 1

The rise in the value of dollar or the appreciation of dollar will have different impact on the exporters and importers. When dollar will be more expensive , people will demand lesser US goods. Hence the exporters will suffer as their exports will decline. On the other hand , the importers will be at benefit in US because foreign goods will be cheaper for US importers. The impact will be just opposite on the Indian economy which has depreciated in value. The exporters will be benefited and importers will loose.