Currency fluctuations are asymmetric on exports

World Bank experts have found that export activities are inconsistent with the response to currency appreciation and depreciation, and whether the exporter can benefit from three factors from the depreciation of the currency is affected by three factors.

The World Bank website published an article written by Gonzalo Varela, a senior economist at the bank on June 23 that many developed economies are increasing the benchmark interest rate to cope with inflation. At the same time, the price of some commodities of commodities History has reached a record high, and some economies are facing multiple challenges. Therefore, the development of economics should understand the impact of export activities on changes in exchange rates, flexibly formulate export policies, and actively respond to external shocks.

The economics community generally believes that exchange rates are closely related to exports. The depreciation of the currency of the exporter will increase its export volume, and the currency appreciation will reduce its export volume. For example, an export manufacturer's export towel at the US dollar is depreciated by its domestic currency relative to the US dollar, and the profit obtained may rise because its production cost is calculated in its domestic currency, and the rise in profits will promote its expansion of production , Increase exports. At the same time, due to the depreciation of the currency of exporters, the price of commodities declines, which will also promote the purchase of more goods by importing countries. However, in fact, after the increase in currency appreciation, the number of goods exports decreases, and the number of goods exports increases faster after the depreciation of the Bittage currency, and the two are not symmetrical.

Valera believes that this is related to the three factors: first, information friction. Affected by it, the exporter is easy to lose the customer due to its domestic currency appreciation. However, when the currency depreciates, especially for some of the products that are large, it is not easy to find new customers. The cost paid by the exporter to find new customers may offset the favorable impact of currency depreciation. The second is supply restrictions. In some cases, the types and outputs of the exporters can be exported have reached the upper limit. If you want to expand the production size to export more goods, you must obtain more funds through credit and other channels, but this is not easy. The third is market pricing. If the exporter has a small scale and limited bargaining capacity compared to buyers in the world, then when the exporter's currency depreciation, the buyer can ask the price of the product to reduce the profit of the exporter. Valera emphasized that in order to maximize the challenges of currency depreciation and create a favorable export environment, the needs of developing economies need to pay attention to and evaluate the impact of the above factors.

Source: China Social Science Network-Journal of Social Sciences of China

Author: Yao Xiaodan/Compilation

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