What are the consequences for an economy if its currency is "gaining strength?"

Expert Answers

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There are two major consequences of this.

First, the people in that economy will be able to buy imports more cheaply.  Their currency will be worth more of other currencies than it once was so ever dollar (or whatever currency) they make can buy more goods and services from other countries.

Second, firms in that economy will not be as able to export as they were before.  Foreign currencies will not buy as many of the goods and services these firms provide.  This will make it harder for them to sell their products abroad. 

In these ways, a strong currency is both a good and a bad thing for an economy.

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