Question

If the exchange rate of the home currency rises, the value of exports of
the economy is likely to..............?​

Answer 1

In general,an increase in the value of the home currency in exchange rate market leads to a decline in the export earnings of the home country in the international market.

Explanation:

A higher value of the home currency in the exchange rate market implies an appreciation of the home currency or increase in the value of the home currency relative to other foreign currencies.This would make the goods and services exported by the home country more expensive as the buyers or importers of those goods and services would have to pay a higher value due to the rise in the currency value of the exporting country.As a result,the demand for export goods and services produced by the home country will decrease in the international market and its value of export will also decrease consequently.

Answer 2

If the exchange rate of the home currency rises, the value of exports of  the economy is likely to decrease. This can be explained as follows.

• When the exchange rates of the home currency increases, that implies an appreciation of the home currency or the increase in the values of the goods relative with respect to the other countries.
• This implies the goods and services which exported by the home country will become more expensive as the foreign importers of those goods and services would have to pay a much more greater price due to the rise in the currency value of the exporting country.