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Briefly explain the effect of the following on the Balance of Payment of a country. Appreciation in the domestic exchange rate. - Economics

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प्रश्न

Briefly explain the effect of the following on the Balance of Payment of a country.

Appreciation in the domestic exchange rate.

टिप्पणी लिखिए

उत्तर

Appreciation of the domestic exchange makes exports more expensive, leading to decreased export revenues; a strong home currency makes imports cheaper for domestic consumers, thereby increasing imports. The current account deficit follows from this. It affects BOP adversely.

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