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EXPLAINED: How fall of a currency value affects a country? : Using Case study of China and Nigeria
In the month of April, The Indian Rupee hit a nine-month low of 75.4 against the US Dollar and had lost nearly 4.2 per cent over the last three weeks. This made the Indian Ruppee one of the biggest loosers in the emerging market currencies! and then it went further down to 77.63 Rs per Dollar!! Now as soon as this happened, there was alot of panic among the retail investors. But you know what guys? While most of us think about currency depreciation as a bad thing, very of us know that when the value of currency drops it brings both advantages and disadvantages along with it!! In fact, sometimes, even giant countries purposefully devalue their own currency to grow their economy!! The question is? How is it even possible that a drop in value of a currency can benefit a country? Why do countries purposefully devalue their own currency? and most importantly, as investors what are the fundamental lessons that we need to learn to about the impact of the fall of our Currency!!