Question

1. List four possible reasons for an appreciation of rand against the us dollar.
2. Explain how changes in exchange rates can influence exports and imports?

Answer 1

4 reasons for an appreciation of rand against the us dollar. 

1. When there is a higher demand for Rand.
2. When there is lower supply for Rand.
3. High economic growth
4. Low rates of inflation.

Explain how changes in exchange rates can influence exports and imports?

The exchange rate has an effect on the trade surplus, which in turn affects the exchange rate. A weaker domestic currency stimulates exports and makes imports more expensive. On the other hand, a strong domestic currency hampers exports and makes imports cheaper.