Competitiveness..

What will happen if ur currency appreciated to fast and to much??

If that happen..ur country's growth can shrink drastically..do u know y? it is because

y = c + i + g + (x - m)

Every variables influence the y (GDP).. any shock to these variables can lower the gdp value.. however, the x-m or trade balance has direct impact to the exchange rate shock... when ur currency appreciate to fast..ur exports become more expensive..while ur import remained the same, ur trade balance shrank because ur export value felt (importers wont like to import ur goods if it is expansive).. others variables ..malas nak explained dah..kalo nak tau sila rujuk buku ekonomi k..arios


Regards,
Sunofguidance