Debunking the "weaker currency = more exports" myth in 2 seconds...

[Mr Khan]

SamuelRSmith said:

Mr Khan said:

Somebody did report him, yes.

Anyway, now it sounds like you're confusing arbitrage, export competitiveness, and inflation vs depreciation. The issue is once you have sufficiently depreciated and your exports are *so* super-competitive that they're the only thing anyone's buying, that will bite back into currency appreciation and leave you forced to inflate again if you want to depreciate, but levels of competitiveness are sustainable over time if you manage to hold constant vis-a-vis the currency you want to maintain competitiveness with, which assumes relative stability in all markets, and so long as it doesn't lead to overwhelming demand for your currency abroad.

How do you manage that?

1. Relative stability in target currency

2. Careful minor intervention policy to keep the currency pegged. Buy assets when you need to, sell them when you don't.