Normally, trade deficits tend to be self-correcting. A country with a trade surplus, in that it sells more abroad than it buys, will create an international demand for its currency. If you want its stuff, you need its currency. As a result, strong trading positions tend to strengthen a country’s currency. The opposite is true with countries with weak trading positions. If no one wants your stuff, no one really needs your currency. But when a country’s currency rises, its products become more expensive. This gives a competitive opportunity to countries with weak currencies to start selling
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