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Iowa Ag Review

Abstract

Roughly 20 percent of U.S. agricultural production is exported to other countries. So our competitiveness in export markets is crucial to the stability and growth of U.S. agriculture. One of the fundamental factors in our competitiveness in export markets is the currency exchange rate. The currency exchange rate is the ratio of the value of a nation’s currency to the value of another nation’s currency. Many factors affect exchange rates, including the countries’ macroeconomic policies, fiscal situation, and expected economic growth. Changes in the exchange rate affect our agricultural trade competitiveness because they indicate relative changes in the prices for traded goods in other countries. Nearly half of the change in the real value of U.S. agricultural exports can be attributed to changes in exchange rates.

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