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Username: BobM Rating:  Asked to: Chaoxiang Lee Date Created: 13 Sep 2018 |
| Category | 28 |
| Tag | Financial |
| Question | What is a 'Weak Currency'? |
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Hello BobM, A weak currency is one whose worth has decreased in value in comparison to other currencies. It is commonly found in nations with poor economic fundamentals, which may include a high rate of inflation, chronic current account and budget deficits, and sluggish economic growth. Nations with weak currencies usually have much higher levels of imports compared to their exports, resulting in more supply than demand for such currencies on international foreign exchange markets — if they are freely traded. While a temporary weak phase in a major currency provides a pricing advantage to its exporters, such a benefit seldom accrues to exporters in weak currency nations since other factors such as high input costs and bureaucratic red tape may offset this advantage. |
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