The relationship between stocks and currencies


When a country's currency rises💸 relative to other currencies this usually means stocks in that country will fall in price and vice versa. ⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀
This means it is now more expensive for foreign investors to buy the stocks of that country as they will have to exchange their weaker currencies to the pound😥 (for example). This means there will be less demand for the stocks of companies in that country and their prices will slowly begin to fall and vice versa . ⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀
It also becomes more difficult for UK companies to sell their products overseas due to the rising cost for foreign buyers caused by the pound rising😐. This means UK companies make less revenue and less profits and in turn their stocks are worth less😣. ⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀
Any profits made overseas by Uk companies in foreign currencies will also be worth less when exchanged back to the pound and so the same effect of making less revenues and profits will cause UK companies to be worth less.(Their stocks will become cheaper). ⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀
If the £ falls in relation to all other currencies our company stocks will be cheaper to purchase by foreign investors and our goods will be cheaper for foreign consumers who will book cheap holidays☀️☀️ in the UK etc as we become more affordable. ⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀
China greatly devalued is currency in the past decade to attract more money into the country from foreign consumers. You might not have gone to holiday in China but you sure bought a lot of chinese made goods🕹🎮, directly or indirectly. ⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀⠀
When you pick your next holiday destination, take into account the spending power the pound gives you in contrast to the local currency of your destination and reflect on how this affects stock prices in the UK.

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