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Exchange rates - Coggle Diagram

- - - - Imports are cheaper
      - Our exports are more expensive for others
  - - - Imports are more expensive
      - Exports are cheaper for others
      - J-Curve affect
        
        In the SR the current account may deteriorate
        
        Firms have stocks are are tied into existing contracts
        
        Consumers take time to react to lower prices
- - - - Change in demand for currency
        
        in change current account exports
        
        FDI
        
        Hot money
      - Change in supply
        
        change in imports
        
        Outward FDI
  - - - FOREX transactions
        
        Buying will reduce value by increasing supply
        
        Selling Forex will increase value
      - Interest rates/hot money
      - Can cause competitive devaluation-China