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by dmichulke 3476 days ago
All central banks continuously print money because they consider their currency "too strong" and say this will hurt exports.

At some point the exchange rate falls and suddenly no one is happy with it either. Recent examples are China, GB, Brazil, Venezuela.

The truth is - as with your comment - a surging/falling exchange rate is neither good nor bad. It has positive and negative effects and things will balance out.

Or to say it differently:

An exchange rate is never low, nor is it high, it is precisely where it should be. - Gandalf the Grey

3 comments

If you print money, you are in control and you do it because you believe that you currency strength is harming your economy somehow: that's like a Sales because you want to get rid of stock to introduce a new model for example.

In this case the other countries are dumping GBP because they think the UK economy will become weaker. That would be like a Sales because your product is flopping.

Same effect, difference cause. One is voluntary on the country/company term, the second is forced by the other actors of the market. The fall of the GBP is significant. The rest of the World is shorting the UK right now and that in itself can be what pushes the UK economy in danger zone.

Printing out money also increases the market cap of the currency; which means that people have more currency in their pockets. Devaluation of a currency does not.
A falling currency signals a weak economy.