Question

Suppose that a Jordanian shoemaker company imports shoe components from Nigeria and exports shoes to Egypt. Also suppose the Egyptian currency depreciates, and the Nigerian currency appreciates, relative to the Jordanian currency. How each would Impact the Jordanian shoemaker.

Answer 1

As Nigerian currency appreciate compare to Jordanian currency I.e. Jordanian currency depreciate compartivly.It mean that Jordanian company have to pay more amount for importing raw materials from Nigeria.thus their import value increased.

While Egypt currency depreciate compare to Jordanian ccurrency, it means Jordanian currency appreciate comparatively and thus they (jordanian)have comparatively advantage now in exporting the final goods or shoes as they(Egypt) have to pay more comparatively.

If net profit from cost of import of raw materials and earning from export of shoe is higher than before than Jordanian shoe maker is promote himself to export more and more other wise veceversa.