Foreign Exchange Market

Foreign Exchange Market: 

• Buying and selling of currency

Appreciation: 

• "Strong dollar"
• the dollar buys more currency and results in less expensive imports and more expensive exports
• Lead to a trade deficit, imports will increase because they are cheaper

Depreciation: 

• "Weak dollar"
• The dollar buys less of another currency and results in more expensive imports and less expensive exports
• Leads to a trade surplus, cheap exports and currency is weak