o I should have taken economy class..) Anyways, I have a question: What is the effect of pricing on overall items (such as food, clothing, etc) when a country's currency becomes stronger. Do these products in store lower in price significantly ?
For Canada yes prices should be lower. You can buy same thing for less money. This should also lower prices for imports because most are priced in US dollars.
Sounds good The only thing I've noticed going down are the price of clothing over the past few years..
I'm in the UK, and most of my earnings online ar in $US, so with the strength of the pound just now my earnings are a lot less when converted to pounds.
Within your own country it makes no difference how strong or weak your currency is directly. Indirectly it most likely will as government will try to control aspects such as inflation, interest etc all of which contribute to the overall currency strength. Internationally it makes a big difference as you then are considering the exchange rate.
In teory, you should be buying things for less but retailers will not reduce the prices. Standard reasons they will give to you is that they are still holding the old stocks which they bought with weaker currency.
The prices of imported goods may move down. There isn't any effect on locally manufactured goods. Prices of imported industrial products usually move in inverse proportion, to the value of country's currency. At retailer level, goods become cheaper if there is competition amongst retailers and amongst different products. Otherwise once prices go up, retailers prefer not to reduce them again.
It depends what you mean by "stronger." Are you talking about one currency rated against another or are you talking about inflation/etc? For instance, as a currency gets devalued by inflation, things cost more. For instance, that $1 soda might be $1.10 now. That's why you want to sell capital goods when inflation rises and buy when it lowers. (money supply) As to C v. C, when the USD weakens (for instance), our exports increase and imports decrease, because it's cheaper for someone with a stronger currency to buy our stuff and it's more costly for us to buy their stuff. Take your average clothing outlet. Let's imagine that they import everything. If the dollar weakens, it could cost them more to import (depending on where they get products/services from). That $10 item maybe costs $11 now. That cost has to be passed on (wholly or partly) to the consumer. But this is a simplified response to a complex equation. Sometimes weakened currency is good and strengthened currency is bad.
well exporters of stronger currency country starts loosing their clothes if central bank doesnt stop its strength.
Yes, that's what I thought... and most of your products are imported from the states ... I guess roles can reverse and we can buy things to less in the states
The country's currency becomes strong or weaker relative to other countries. It doe not have much effect in the home country straightaway. you can get more or less for your buck in terms of imports.