Answered Essay: The Strength of Currency The value of each country's currency changes almost daily (this can

The Strength of Currency The value of each country’s currency changes almost daily (this can affect which country you might wish to visit on a vacation). How important is the value of the US dollar to international trade? How does a weak or strong dollar affect trading? Is there any way to stabilize the value of the dollar?

Expert Answer

The value of the currency of any country depends upon the demand and supply of that currency supposse we have to do payment in Japanese Yen then the demand of the Yen will increase and thereffore the Yen will become strong against the US dollar, Every country has some foreign reserve to deal with such transactions to maintain the exchange rate of their currency against fluctuating. Now take an example suppose you order something from other country than if the dollar is strong than you would be able to get more use of the dollar value where as if it devaluate or the Dollar becomes weak than in that case we will have to pay more to the seller.

The Dollar and other european currencies are stablized by euro dollar which is a basket of currencies, in which the stablization of the currency of the europe countries is done like suppose US dollar value is decreasing in that case the Other members of the Europe but the US dollars to increase its Demand and to stablize it. other ways to stablize are to lower or restrict more imports and promoting exports this increase demand of our currency.

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