Question

Discuss why it is often asserted that exporters suffer when their home currencies appreciate in real terms against foreign currencies and prosper when their home currencies depreciate in real terms

Answer 1

An appreciation in the local currency in comparison to the other currency will make the local goods costlier in the foreign market, it will increase the price of the good that the consumer will pay for the good and at a higher price the demand decrease thereby decreasing the profit if the exporter.

But when the local currency depreciates it will decrease the price of the local good in the foreign market increasing the demand and the profit of the exporters.