Currency fluctuations: Take the hedge off?
Many Happy Returns
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What Is the Importance of the Exchange Rate of a Country?
Inflation matters because if you've got a currency which effectively is losing its buying power very quickly. Then you nove that's going to weaken the currency relative to others where inflations not so high. One other thing i came across is that the current account of a country kind of matters for the exchange rate. So if it's a importer, then it's kind of buying more goods from abroad than it can actually afford. The way i kind of understand it is this excess demand and for foreign currency lowers the country's exchange rate.
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