Why does a trade deficit lead to the depreciation of a country’s currency?
August 3rd, 2009
M.S. V asked:
On wikipedia it says: A nation with a trade deficit will experience reduction in its foreign exchange reserves which ultimately lowers (depreciates) the value of its currency. Why does a reduction in the foreign exchange reserves lower the value of currency?
BARBARA
On wikipedia it says: A nation with a trade deficit will experience reduction in its foreign exchange reserves which ultimately lowers (depreciates) the value of its currency. Why does a reduction in the foreign exchange reserves lower the value of currency?
BARBARA
