Essay: Effects of Currency Devaluation

The effects of currency devaluation and depreciation are that it causes inflation, interest rates increase, and slower economic growth. Currency devaluation is seen as a sign of a weak economy therefore it kills investor confidence. Currency appreciation is a sign of a good economy it affects both country and trading partners economic aspects.

The US dollar ha for a long time affected the aspect of trade, it is the most acceptable medium of exchange. Therefore a strong dollar implies a strong economy, and the flow of trade is higher.

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