Question

Why do highly inflated countries such as Brazil tend to have weak home currencies?

Answer 1

Solution:-Here somany reasoning for why highly inflated countries such as Brazil tend to have weak home currencies.If the country is in the state of high inflation. No one would want their currency. for example, if you can buy an apple for $1 today; tomorrow you will buy an apple for $2. your buying power would be eaten up by the inflation. Let say if you are a investors. will you invest in an highly inflated countries? let say you need $1 billion to build a building, but next day, you need $2 billion because of inflation. no one would do that. and if no one wants its currency, of cause, its currency will be weaken.