The exchange rate and competitiveness in international trade

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Currently we can see that we get more information on the dollar in different countries of the region and depending on the nationality of the means of communication or comfort concerns that have local economic agents to such news is transmitted. For what is this? What they benefit or harm?

 

It happens that when a currency is devalued against the currency which is a universal reference point, the dollar, there are advantages for the local economy. Yes, advantages. Domestic production is more likely to be attractive in the international market and consequently its price is “cheaper”. For example, if we go from the United States to Colombia, our dollar by a high value will allow us to acquire more goods than we had acquired prior to the revaluation; so that countries like Colombia would benefit from the devaluation of its currency against the dollar because their products are cheaper than those that would acquire in our own country.

 

This allows you to sell more of their products to the rest of dollarized world (export) and therefore domestic production, employment, complementary businesses, etc. would benefit That is, exports to one devualuativo effect produced become more competitive. But dollarized countries the opposite is true: their products lose competitiveness, become more expensive because every dollar purchase also it is affected exports and domestic production likely, among others.

 

In the region, besides the United States, countries such as Panama, El Salvador and Ecuador have consequences in its commercial dynamics due to its dollarized system. While countries like Colombia, Mexico, Chile, Brazil and Peru have a great advantage when exporting goods and services.

 

If you are a OCE * or intend to become one, remember to previously perform market research with professionals in the field to take into consideration factors like this resulting from the international situation, in addition to tariff barriers free zones, among others.

 

 

References

* Foreign Trade Operator

 

 

From page http://businessinusa.us/the-exchange-rate-and-competitiveness-in-international-trade/ Business in USA is a company of Allmed Group Corporation

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