Could someone please correct this

Question

Inflation also can cause by foreign currency through the balance trade account;
Inflation can also be caused by the effects of exchange rate fluctuations on the balance of trade account.
how it happen is, with the depreciation of the currency we have to spend more local money to take one unit of foreign money to export goods and services.

Dilshi · Accepted Answer

Help me to correct this.. Please..

Blue Jay · Answer

Dilshi, I just looked at this paragraph, as well as the other paragraph you posted (More than the above effects as a major scenario; when the currency.....), and I'm finding it hard to understand them, which makes it difficult to offer suggestions. Do you think you could explain what you are trying to say in each line of them? I believe we would then be better able to help you.

Dilshi · Answer

Inflation also can cause by foreign currency through the balance trade account;
how it happen is, with the depreciation of the currency we have to spend more local money to take one unit of foreign money to export goods and services. Therefore the price of imported goods and services increase, then because of that the cost of goods and services increase. Finally it affects all over the country.

Teacher Blue Jay is this OK now?

Blue Jay · Answer

Inflation also can cause by foreign currency through the balance trade account;
Inflation can also be caused by the effects of exchange rate fluctuations on the balance of trade account.
how it happen is, with the depreciation of the currency we have to spend more local money to take one unit of foreign money to export goods and services.
What happens is that the depreciation of the currency causes us to have to spend more local currency to obtain the foreign currency we need to pay for imported goods and services.
Therefore the price of imported goods and services increase, then because of that the cost of goods and services increase. Finally it affects all over the country.
This increases the cost of importing goods and services, which results in higher prices throughout the country.

Dilshi · Answer

Thanks a lot teacher Blue Jay ..

Can u please correct this one also?

More than the above effects as a major scenario; when the currency getting depreciate it will directly adverse to the balance trade account; how, when exporting goods and services at a low income exports may discourage, so more have to spend more for imports. Therefore trade balance gets worse to the balance trade account. It proves that there is a strong bond between foreign currency and balance trade account.

And also, the depreciation of the LKR has affected the balance sheets of domestic companies, because liabilities are denominated in foreign currency while assets are in local currency.

Could someone please correct this

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