1. The Impact of Foreign Exchange Rates By Paul D. Mixon

2. Exchange Rates Impact Trade When exchange rates change, the balance of trade can fluctuate. If the value of your currency goes up, then goods from other nations will be cheaper.

3. Example For instance, lets say $1= 10 pesos. If a shirt cost 100 pesos, then you could buy it for $10. If the dollar increased in value, lets say, $1= 20 pesos, then the same shirt would only cost you $5. Also, a shirt that cost $5 in the U.S. would originally cost 50 pesos, but now costs 100 pesos.

4. Example Now lets say $1= 10 pesos. If a shirt cost 100 pesos, then you could buy it for $10. If the dollar decreased in value, lets say, $1= 2 pesos, then the same shirt would only cost you $50. Also, a $5 shirt in the U.S. would originally cost 50 pesos, but now costs 20 pesos.

5. Exchange Rates and Trade If the dollar increases in value, then other nations goods will be cheaper to us and our goods will be more expensive to them. If the dollar decreases in value, then other nations goods will be more expensive to us and our goods will be cheaper to them.

6. Benefits and Losers If the dollar increases in value: - Consumers will get cheaper goods from other countries. - Businesses will be hurt because other countries will be less likely to buy American products.

7. Benefits and Losers If the dollar decreases in value: - Consumers will pay more for foreign goods. - Businesses will sell more to other nations and will hire more workers.

8. Questions?