

Ask YC: euro vs dollar vs export? - Tichy

Just read in the German newspaper: german businesses are worried that the high euro will hurt their foreign sales. Now I am wondering, naively trying to understand economics: isn't a high Euro a result of high demands for European goods? In other word, is that another example of an extremely absurd headline, or am I overlooking something?<p>It's just the kind of headline newspapers blurt out on a regular basis, so I would be interested to understand it.
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davidw
They're not mistaken to be a bit worried, if a lot of their demand is from the
US. To really start understanding these things... probably the best thing is
to follow some good economics blogs.

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Tichy
Naturally, it get's harder for foreign countries to buy European goods, I
understand that. It just seems as if the cause is too high a demand for
European goods to begin with, so there is not really anything to worry about?
At the moment the statistics are still good, apparently, as demand is still
rising.

The other scenario might be that the markets are saturated, like, if Germany
were to produce 10 billion cars per year, but there is only demand for 10
million cars. But then they could lower their prices or just produce less cars
(thus saving costs), which would probably be equivalent to the Euro falling?

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davidw
I think the problem is more that the dollar is falling than that the Euro has
risen, and a lot of it has to do with money flowing around, debt, interest
rates and lots of other things that I'll admit that I sort of grasp when I
read them, but haven't digested well enough to explain them decently.

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Tichy
I guess if the rest of the world went broke, it would be bad news for export.
Good products, but no buyers. But the exporting country would still have their
presumably superior efficiency, so they can't be too bad off.

