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What is the impact of an appreciation of the USD (vs. the MXN) on U.S. exports...

  1. What is the impact of an appreciation of the USD (vs. the MXN) on

  • U.S. exports to Mexico

  • U.S. imports from Mexico
  • The dollar value of U.S. investments in Mexico (and denominated in MXN)
  • The MXN value of Mexican borrowings (liabilities) in the U.S. (and denominated in USD)

Answer all of the above with a simple ↑ or ↓

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Answer #1
  1. What is the impact of an appreciation of the USD (vs. the MXN) on
  • U.S. exports to Mexico

Ans : Decrease

As the product and services of US will now be costlier for Mexican people, they will buy less of U.S. products, so U.S. exports to Mexico will decrease

  • U.S. imports from Mexico

Ans: Increase

As. Mexican goods will become cheaper for U.S. people, they will buy more of U.S. products

  • The dollar value of U.S. investments in Mexico (and denominated in MXN)

Ans: Decrease

In dollar terms, the value will reduce. However, in MXN terms the value will increase

  • The MXN value of Mexican borrowings (liabilities) in the U.S. (and denominated in USD)

Ans:: Decrease

In MXN terms the borrowings will increase however in USD terms the value will decrease

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