Economics Exchange Rate Systems Questions
Exchange rates can significantly impact multinational corporations' competitiveness. When a country's currency depreciates, it becomes cheaper for foreign buyers to purchase goods and services from that country. This can enhance the competitiveness of multinational corporations based in that country, as their products become more affordable in international markets. On the other hand, if a country's currency appreciates, it becomes more expensive for foreign buyers, potentially reducing the competitiveness of multinational corporations. Additionally, exchange rate fluctuations can affect the cost of inputs, such as raw materials and labor, which can impact the profitability and competitiveness of multinational corporations operating in different countries.