A depreciating u.s. dollar is weakening because it is worth less in terms of other currencies.
What happens when the U.S. dollar depreciates?
- If the dollar depreciates (the exchange rate falls), the relative price of domestic goods and services falls while the relative price of foreign goods and services increases.
- The change in relative prices will increase U.S. exports and decrease its imports.
What is meant by depreciating currency?
- Currency depreciation is a fall in the value of a currency in terms of its exchange rate versus other currencies.
- Currency depreciation can occur due to factors such as economic fundamentals, interest rate differentials, political instability, or risk aversion among investors.
What are the effects of currency depreciation?
The main effects are: Exports are cheaper to foreign customers. Imports more expensive. In the short-term, a devaluation tends to cause inflation, higher growth and increased demand for exports.
Learn more about U.S. dollar depreciates
brainly.com/question/14308463
#SPJ4
