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Exchange rate fluctuations can significantly impact international trade, as a stronger domestic currency makes exports more expensive and imports cheaper, potentially reducing export competitiveness. Conversely, a weaker currency can enhance export demand but increase the cost of imported goods and services, potentially leading to inflation. Additionally, exchange rate volatility can affect foreign investment decisions and financial markets, as investors may seek stability in their returns. Overall, these fluctuations can influence economic growth, inflation rates, and the balance of trade.

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3w ago

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