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    Current page location: Home > Answers > How is real exchange rate related to net exports?
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    Ruby Brown
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    How is real exchange rate related to net exports?

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    • Time:2018-10-19 15:22:38
    How is real exchange rate related to net exports?
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    Siyu Song
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    Let's see below :)

    1. Exchange rate = cost of one currency in terms of another

    Example: EUR/USD = 1.05, 1 Euro buys 1.05 Dollar

    Net exports = Exports - Imports

    Example: A country Exports for 10Bn and imports for 8Bn, hence net exports are 2Bn

    The lower the countries' exchange rate is, the more attractive its products get. Hence the more buyers are there. However, the imports become more expensive. This is why the relationship mostly depends on the currency rates amongst the countries' currencies that a county runs regular trades with.

    #1Floor 2018-10-19 17:30:58 Reply(0)
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