Respuesta :
If the Indian government unexpectedly announces that it will be imposing higher tariffs on foreign goods one year from now, it will strengthen the Indian rupee value.
If the Indian government unexpectedly announces that it will be imposing higher tariffs on foreign goods one year from now, what will happen to the value of the Indian rupee today? explain
Currency appreciation in the forex markets refers to the rise in the value of one currency in comparison to another.
The following suggestions for the currency and the whole economy would be made if India were to apply unexpectedly high tariffs on unfamiliar goods:
- Taxes will increase the value of trade currency if they have a beneficial effect on the trade balance. The nation that is bringing them in could, however, respond in kind.
- The currency's value will decrease if a lot of goods utilize naturally occurring imports that are now much more expensive.
The value of the Indian rupee will increase. Taxes will be imposed, which will increase the rupee's typical future exchange rate and consequently its typical appreciation. The interest rate on assets denominated in rupees will increase as a result, shifting the interest curve to one side and increasing the exchange rate of the rupee in tandem.
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