Post
Topic
Board Economics
Re: How to strengthen a country's currency?
by
umair127
on 20/06/2014, 10:39:31 UTC
There are many such ways to do this; have a good credit record, not default on loans, have high interest rates, have a strong legal system, have a good business environment, have high quality workers, good infrastructure, political stability, high exports, strong financial system, etc.
Now many of those are long term sort of things, but short term, interest rates, balance of trade changes, political stability, etc.
These are ways to strengthen a country's currency. But i have one question in mind that if one country's currency is more than another country then also its economy will be stronger?
Let me clear your doubt. Suppose Country A's currency is worth more than that of Country B, it does not necessarily mean that Country A's economy is stronger than B's. For example, Japan's economy is regarded as one of the world's strongest, and yet a single Japanese yen exchanges for considerably less than US$1. On the other hand, Cyprus' economy is considerably smaller than the U.S. economy, but Cyprus' currency, which is the pound, exchanges for about twice as much as the U.S. dollar.