How are exchange rates and currency relevant to business?

Exchange rates play a crucial role in the realm of business. They determine the value of one currency in relation to another, which in turn affects the cost of importing and exporting goods.

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A weak currency can have significant impacts on a country's economic health. When the local currency depreciates, it makes foreign products more expensive for domestic consumers.

This increase in prices can lead to a rise in inflation, as the cost of goods and services increases across the board. Inflation can have detrimental effects on a country's economy, eroding purchasing power and reducing consumer spending.

For businesses, a weak currency can make it more difficult to compete in the global market. Foreign competitors may be able to offer their products at lower prices, making it challenging for local businesses to stay afloat.