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question about currency strengthens

Former userFormer user10y ago

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kengarrettkengarrettTutor10y ago#1
Let's say the current exchange rate between a Westland $ and a US$ is 1 W$ = 1.5 US$ So, is something made in the US sells there for $30, it would sell in Westland for 30/1.5 = 20.W$ If the W$ strengthened to 2 US$/W$, then the selling price in Westland would be only 30/2 = $15 W$. So that import has got cheaper resulting in less of the home-made product being sold.
kengarrettkengarrettTutor10y ago#2
Your competitors, who are importing, can seLloyd more cheaply because the currency has strengthened. If they sell more cheaply, you will lose sales volume unless you reduce your prices too. That can also mean a reduction in revenue.
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