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When imports to your country get more expensive as your exchange rate falls.
Exporters to your country then have to start cutting their prices to keep their market share. Which then means your exchange rate gets stronger and start to move back up again.
All else equal :)
I have seen some cracking deals due to the virus as exporters after exporter are starting to slash their prices.
Does this mean as we come out of the virus that trade deficit countries exchange rates will be stronger than they were ??
I'm thinking UK and US against the Euro as European exporters start slashing their prices.
All else equal.
If it stands true that cutting export prices from the EU to the UK make the £ stronger.
The pass through debate.
It will be interesting to see what happens as we come out of the virus. If large EU exporters start cutting prices or take the hit of job losses instead.
My guess is very large German car manufacturers are going to offer some cracking deals along with other large exporters.
3 comments:
Question:
When imports to your country get more expensive as your exchange rate falls.
Exporters to your country then have to start cutting their prices to keep their market share. Which then means your exchange rate gets stronger and start to move back up again.
All else equal :)
I have seen some cracking deals due to the virus as exporters after exporter are starting to slash their prices.
Does this mean as we come out of the virus that trade deficit countries exchange rates will be stronger than they were ??
Thanks in advance..
I'm thinking UK and US against the Euro as European exporters start slashing their prices.
All else equal.
If it stands true that cutting export prices from the EU to the UK make the £ stronger.
The pass through debate.
It will be interesting to see what happens as we come out of the virus. If large EU exporters start cutting prices or take the hit of job losses instead.
My guess is very large German car manufacturers are going to offer some cracking deals along with other large exporters.
£ up
Euro Down
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