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Hello sir,
If balance of payment deficit, meaning import> export.
so import will be cheaper and export will be expensive to the foreign purchaser.The import will be cheaper because of high inflation in domestic country? so people choose to buy outside?
If the importer is being invoiced in their own currency then yes.
If the importer is being invoiced in the exporters currency, then although the cost will be inflated less their currency will have depreciated and so they will (in theory) end up having to pay the same amount.
i see, so balance of payment deficit does not lead to an appreciation domestic currency right?
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