Depreciating Currency

By Ramesh Akkineni
from an article in Livemint by Shanmuganathan N.
An appreciating currency is a consequence of a nation’s competitiveness in international trade. If a depreciating currency were to aid in a nation being competitive, then Zimbabwe would be amongst the most competitive of nations today.
A study of history would show that nations have “never” become competitive on the back of a depreciating currency. In fact, countries for long periods of time have emerged more successful and competitive with the help of an appreciating currency, i.e., the US right from the beginning of the century till the late 1960s, Germany and Japan post the World War II situation. Not only did these countries have an appreciating currency, but they also had amongst the highest wages and still emerged competitive in international trade.

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