How to strengthen a country's currency?

[sana8410]

I would really like to know the best way to strengthen a country's currency.
Increase in it's import or export?
Please share some good ideas.

[umair127]

There are many such ways to do this; have a good credit record, not default on loans, have high interest rates, have a strong legal system, have a good business environment, have high quality workers, good infrastructure, political stability, high exports, strong financial system, etc.
Now many of those are long term sort of things, but short term, interest rates, balance of trade changes, political stability, etc.

[Rigon]

I would really like to know the best way to strengthen a country's currency.
Increase in it's import or export?
Please share some good ideas.

There are so many different factors that could strengthen a countries currency, but it all comes down to demand. If the currency is in demand it will strengthen. Lots of things could cause this demand - higher interest rates (better return for investors) for example.

[sana8410]

There are many such ways to do this; have a good credit record, not default on loans, have high interest rates, have a strong legal system, have a good business environment, have high quality workers, good infrastructure, political stability, high exports, strong financial system, etc.
Now many of those are long term sort of things, but short term, interest rates, balance of trade changes, political stability, etc.

These are ways to strengthen a country's currency. But i have one question in mind that if one country's currency is more than another country then also its economy will be stronger?

[umair127]

There are many such ways to do this; have a good credit record, not default on loans, have high interest rates, have a strong legal system, have a good business environment, have high quality workers, good infrastructure, political stability, high exports, strong financial system, etc.
Now many of those are long term sort of things, but short term, interest rates, balance of trade changes, political stability, etc.

These are ways to strengthen a country's currency. But i have one question in mind that if one country's currency is more than another country then also its economy will be stronger?

Let me clear your doubt. Suppose Country A's currency is worth more than that of Country B, it does not necessarily mean that Country A's economy is stronger than B's. For example, Japan's economy is regarded as one of the world's strongest, and yet a single Japanese yen exchanges for considerably less than US$1. On the other hand, Cyprus' economy is considerably smaller than the U.S. economy, but Cyprus' currency, which is the pound, exchanges for about twice as much as the U.S. dollar.

[zolace]

There are many such ways to do this; have a good credit record, not default on loans, have high interest rates, have a strong legal system, have a good business environment, have high quality workers, good infrastructure, political stability, high exports, strong financial system, etc.
Now many of those are long term sort of things, but short term, interest rates, balance of trade changes, political stability, etc.

These are ways to strengthen a country's currency. But i have one question in mind that if one country's currency is more than another country then also its economy will be stronger?

Actually, Yes. In economics 101, we learned that a country's currency become stronger when there is strong demand for the country's currency. Therefore driving its value up. This is caused by a high number of foreign investors investing in the country, high demand for the country's exports and a low inflation rate.
Subsequently, countries with higher currency also have higher standards of living. This is because the country's people can afford more imports with their money and therefore buy more goods made in other countries.

[Jonton]

These are ways to strengthen a country's currency. But i have one question in mind that if one country's currency is more than another country then also its economy will be stronger?

No. You have to ask yourself: what is the "strength" of that economy.
A strong economy can also have a downgraded currency.  
(like China/Japan for example)
More important is the economical background and the "business model" of the country in which the currency is embedded.

[Jonton]

Perfect timing  
Yes.No.

   

edit: Zolance is also right.

[arbitrage001]

There are many such ways to do this; have a good credit record, not default on loans, have high interest rates, have a strong legal system, have a good business environment, have high quality workers, good infrastructure, political stability, high exports, strong financial system, etc.
Now many of those are long term sort of things, but short term, interest rates, balance of trade changes, political stability, etc.

These are the conditions needed for a strong currency, not "how" to strengthen the currency.

To strengthen a country currency, offer what the world need.

Invest in export and tourism industry. If the country has high debt, reduce it and live within the mean certainly help.

Let the market set the currency rate and the interest rate. If the country want to excel in service type industry, invest in telecommunication infrastructure (high speed internet). If the county want to excel in manufacturing type industry, invest in highway, power grid and low cost power and clean water.

Final point,  find the country unique advantage that can be done efficiently and offer the product/service to another country.


If this country already self sufficient, there is little need for international trade and hence no need for strong currency.



 

[Erdogan]

To strengthen a currency (make it appreciate), you have to either increase the demand by expanding the user base (the preference to hold, by many people), or reduce the money supply.

Note1: The USD usage is expanding, because people in countries with collapsing local currencies start to use USD. Ref Argentina, Myanmar

Note2: The relevant money supply includes debt. Fractional reserve banking multiplies the supply by roughly 10 times the existing banknotes, but QE is currently more important, even though the debt (bonds, shares, option contracts) is not totally liquid. So the most straightforward way to reduce the supply now is to clear the debt, that is let it be paid back (or written off if it is not payable).

Note3: For the governments to pay back debt, that means higher taxes, selling off assets and reduced spending, so it is not exactly easy to do and at the same time stay in power.

[painlord2k]

To strength the currency of a country, just stop printing more of it.
Make impossible to anyone, anytime, to print more.

About import and export, if a country have a string currency, it will have imports and export in equilibrium (sum is zero long term).
West Germany had a policy of lower inflation and its currency was strong.

As the wealth inside the country increase (and people outside the country try to acquire the currency for its stability and purchasing power), the people living there and holding the currency, will find themselves owning more currency than they want or need, compared to "stuff" the want or need. So they will buy more from abroad until the import and export balance return to equilibrium.
For example, they could employ their savings to travel as tourists and people in touristic countries would have the currency they need to buy from the country stuff produced there.

A strong currency, usually, make more difficult for government to promise stuff to the people to get elected again, because they can not print as they would like and must tax here and now.

[Swordsoffreedom]

I would really like to know the best way to strengthen a country's currency.
Increase in it's import or export?
Please share some good ideas.

Strong development of the infrastructure so that goods and services can move efficiently then develop a mining industry or forestry industry to acquire resources.

Followed by a movement towards high labor intensive goods if they have a large population to utilize
If not specialization is needed in an industry they can compete in and get cheap resources for.

To strengthen a currency the fundamentals of the economy need to be solid, not just a printing of more currency and debt to holders.

[STT]

Supply and demand as always, to increase demand for one country you usually need good production and export and so a need to buy those goods in that countries currency as well as pay taxes to do business there.

Some say you can just trade or facilitate business and so the currency is demanded as is the world reserve currency system where lower ranked countries lean on the highly rated currencies to hold long term worth for contracted business.
Mostly it does come back to production as no country is impervious to changes in global influence that favour business elsewhere, such as the much talked about swing from west to the emerging east

London is the second most traded centre for Chinese Yuan contracts apparently but I dont think that is enough alone, however Sterling has been rising recently but that is in time with some gdp growth allegedly

[Harley997]

I would really like to know the best way to strengthen a country's currency.
Increase in it's import or export?
Please share some good ideas.

The only way to strengthen a national currency over the long run is to have exports exceed imports. For countries that use another country's currency as their own, that country's imports/exports would be counted as the "host" country's imports/exports

For example:

Country "A" has a very strong economy and it's currency is used widely worldwide.

Country "B" is relatively small and uses Country "A" currency as their national currency (as in they deal solely in that currency, and acquired the currency from selling goods/services to elsewhere.

All else being equal if Country "B" has an increase in exports in relation to it's exports and all else is equal then Country "A" currency will get stronger

[zimmah]

I would really like to know the best way to strengthen a country's currency.
Increase in it's import or export?
Please share some good ideas.

Back it with bitcoins.

Anyway import normally decreases a currency (money goes out, making it less popular and more plentiful outside the countries sphere of influence)

Export normally increases the currency, Altough it might reduce a countries true wealth as you recieve deflationary currency for physical goods.

It's not as simple as this though.

Also keep in mind that countries that live of export often want their currency to be weak, so that they can offer more competitive prices. (China and japan often weaken their currency on purpose to stay competitive in exports, china even more than japan).

The euro is strange in this as some countries live of import and others from export. So some countries prefer a strong euro (for cheaper imports) while others need a weak euro (for more competitive prices on the export market, or else you won't find any buyers). On top of that some exports require imports first. For example plastics and chemicals require the import of oil and other chemicals, they then get refined and the refined product is exported.

So in general these guidelines are true but in practice it's a pretty complicated question.

[Swordsoffreedom]

I would really like to know the best way to strengthen a country's currency.
Increase in it's import or export?
Please share some good ideas.

Back it with bitcoins.

That is an interesting idea unlike gold and silver reserves a Bitcoin address is publicly verifiable and accessible
As long as individuals know the Bitcoin address they can see that their is a reserve available.

I am not certain if that would give Bitcoin an official currency status though which may raise a few legal issues but it is a unique approach that a digital economy provides

Verified reserves visible to all and secure from attack seems like a win win win.

[waldox]

a strong currency means it has strong exports or in the case of oil
you need a certain currency to buy it, in this case its the us dollar

[zimmah]

I would really like to know the best way to strengthen a country's currency.
Increase in it's import or export?
Please share some good ideas.

Back it with bitcoins.

That is an interesting idea unlike gold and silver reserves a Bitcoin address is publicly verifiable and accessible
As long as individuals know the Bitcoin address they can see that their is a reserve available.

I am not certain if that would give Bitcoin an official currency status though which may raise a few legal issues but it is a unique approach that a digital economy provides

Verified reserves visible to all and secure from attack seems like a win win win.

there's a reason currencies are currently unbacked, and the reason is governments don't want backed currencies because they limit them too much (they can't print their way out of their problems).

Printing money, while destroying the economy, will bring huge profit to whoever prints them.

Printing money that is backed by something, especially if the reserves are verifiable, will only result in the money becoming worth much less even quicker and even the one who prints it will not really get richer. (Only a very small amount by diluting the value of the other owners of that currency, but it will directly anger them too). Also it might even be considered a crime to print (even for a government) money that is not backed by provable reserves.

So while backing a currency with bitcoin (which is pointless in itself as you may as well just use bitcoin) might seem like a good idea it will never happen.

What might happen however is bitcoin becoming the worlds #1 currency.

[STT]

So while backing a currency with bitcoin (which is pointless in itself as you may as well just use bitcoin) might seem like a good idea it will never happen.

There is a point, in that the government wants to retain control of its debts and costs and so they continue with a national currency but can also promise to link the value to bitcoins.

Same thing happened with dollar and gold.   You could say they were interchangable so why even bother having both,  well they had 'need' to change the exchange rate and eventually dollar was floated entirely by itself
As a spending entity, think how much poorer government would have been if they had to own actual reserves in line with their costs.


Some will say good gov should not run deficits but others say oh no, what about my monthly publicly funded job and wage packet so they are glad gov always issues IOU notes not the actual reserves directly


Surely we can have at least one tiny island state with bitcoins as reserve in their national bank.  Isnt St. Kitts possible or is that just a territory  

[thecoindoctor]

I would really like to know the best way to strengthen a country's currency.
Increase in it's import or export?
Please share some good ideas.

Good question