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by currenciessfe 1369 days ago
It also means you're paying your labor cheap. That makes you more competitive.
1 comments

But competitive simply means your products sell for less. The question was how does selling for less and buying for more benefit you?
You don't sell for less, since you sell in foreign currency. So you get the same amount of foreign currency (price in USD remains the same), but you need less converted to your internal currency to pay your labor.

But then you can invest that extra profit in decreasing your foreign currency price, thus becoming more competitive.

You can google for longer explanations of why a weak currency is excellent for exporters, this is well established.

I just Googled it, and this is what I found [1]:

When a country's currency appreciates in relation to foreign currencies, foreign goods become cheaper in the domestic market and there is overall downward pressure on domestic prices. In contrast, the prices of domestic goods paid by foreigners go up, which tends to decrease foreign demand for domestic products.

A depreciation of the home currency has the opposite effects.

It contradicts directly your claim that exports don't get cheaper. You're saying exports remain the same (because they don't get any cheaper), and that the only change is an increase of corporate profits at the expense of wages.

[1] https://en.wikipedia.org/wiki/Currency_appreciation_and_depr...

Read again carefully what you quoted. It exactly supports my claim.

> Export dependent nations may actively encourage a weak currency in order to boost their exports.

> A weak currency may help a country's exports gain market share when its goods are less expensive compared to goods priced in stronger currencies. The increase in sales may boost economic growth and jobs while increasing profits for companies conducting business in foreign markets

https://www.investopedia.com/terms/s/weak-currency.asp

Do you read your own quotes?

Where does it support your claim that a weakened currency does not affect the price of exports?

It says the exact opposite. Exports increase because they become less expensive:

> A weak currency may help a country's exports gain market share when its goods are less expensive compared to goods priced in stronger currencies. The increase in sales may boost economic growth and jobs while increasing profits for companies conducting business in foreign markets

The person you are arguing with said this:

>But then you can invest that extra profit in decreasing your foreign currency price, thus becoming more competitive.