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The Effects Of The Real Effective Exchange Rate

This paper analyzes how exchange rate movements affected US top importing and exporting companies’ investments over the 2000-2020 period. The traditional view is that currency appreciation decreases investments. The study found that, when USD appreciates, US domestic importing companies increase investments, whereas importing US subsidiaries of foreign companies reduce investments. Investment decisions of US exporting companies do not depend on the exchange rate changes. The results of this study help further understand US companies’ investments decisions.

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