How Currency Changes Affect Imports and Exports

An error occurred trying to load this video.

Try refreshing the page, or contact customer support.

Coming up next: Achieving Trade Balance: Trade Deficit and Surplus Examples

You're on a roll. Keep up the good work!

Take Quiz Watch Next Lesson
Your next lesson will play in 10 seconds
  • 0:02 Imports and Exports
  • 1:15 Currency Changes and Imports
  • 2:58 Currency Changes and Exports
  • 5:16 Lesson Summary
Save Save Save

Want to watch this again later?

Log in or sign up to add this lesson to a Custom Course.

Log in or Sign up

Speed Speed Audio mode

Recommended Lessons and Courses for You

Lesson Transcript
Instructor: Aaron Hill

Aaron has worked in the financial industry for 14 years and has Accounting & Economics degree and masters in Business Administration. He is an accredited wealth manager.

Learn about how currency changes can affect imports and exports. Find out how this affects you. Discover what happens when a dollar is strong compared to other currencies and what happens when it is weak.

Imports and Exports

When you hear the terms 'imports' and 'exports,' you may think of some complicated and elaborate business you saw on a television show a few months back. You may simply think these terms sound dull and have little impact on your everyday life. The bottom line is that these two terms have a dramatic impact on the economy and the selection of everyday goods that you are able to purchase.

When you walk into large electronic stores, you expect to see top electronic brands from across the world, not just electronics made in your neighboring states. Can you imagine if you walked into a popular electronics store and they only had two television brand choices? You would probably end up paying more money and might not even like the choices you had to choose from. These products from other countries (imports) provide more choices for you and can also help you save money.

One of the biggest factors that influences imports and exports is the value of currencies between trading countries. Let's explore how the value of currencies can impact businesses and directly affect the amount of goods and services you may have to choose from when you go shopping.

Currency Changes and Imports

Imports are goods that are produced in a foreign country but sold in a home country. When people in one country demand products from firms in another country, they must enter into another market first to buy that nation's currency. Once this currency is exchanged, they can then purchase the product.

For example, if you owned a chain of dollar stores and wanted to purchase various products from large Chinese corporations, you often can't just send a check in American dollars to the companies in China. Chinese companies would want to be paid in their own currency. As a result, you would have to go into a foreign exchange market and buy the Chinese currency with the American dollars so that you could pay for your goods.

When the U.S. dollar is strong compared to many other countries' currencies, imports are less expensive. This is because every American dollar you have will buy more corresponding foreign currency. So when you go to pay the Chinese companies in their own currency, you won't have to spend as many dollars to do it! As a result, this will lead to increased demand for imported products and the currency needed to purchase them.

On the other hand, if you are importing and your local currency depreciates in value or becomes weak, then the products you are importing become more expensive. It now costs you more U.S. dollars to purchase foreign currency, making those products in Japan and China more expensive. A strong dollar or currency leads to higher imports. A weak dollar or currency to lower imports.

Currency Changes and Exports

To review quickly, exports are goods that are produced in a home country but sold to foreign countries. For example, you may have a business that makes and sells your own clothing line in the U.S. In order to increase your sales, you decide to enter and market your clothes to England and Europe. All of the sales and shipments of your clothes to England and Europe are exports.

To unlock this lesson you must be a Member.
Create your account

Register to view this lesson

Are you a student or a teacher?

Unlock Your Education

See for yourself why 30 million people use

Become a member and start learning now.
Become a Member  Back
What teachers are saying about
Try it risk-free for 30 days

Earning College Credit

Did you know… We have over 200 college courses that prepare you to earn credit by exam that is accepted by over 1,500 colleges and universities. You can test out of the first two years of college and save thousands off your degree. Anyone can earn credit-by-exam regardless of age or education level.

To learn more, visit our Earning Credit Page

Transferring credit to the school of your choice

Not sure what college you want to attend yet? has thousands of articles about every imaginable degree, area of study and career path that can help you find the school that's right for you.

Create an account to start this course today
Try it risk-free for 30 days!
Create an account