Certified Management Accountant Practice Exam 2026 - Free CMA Practice Questions and Study Guide

A weak currency typically makes domestically produced goods less expensive for foreign buyers and can lead to an increase in export demand. This phenomenon occurs because when a country's currency weakens, the prices of its goods become lower for buyers using stronger currencies. As a result, exports tend to rise, enhancing the balance of trade, which refers to the difference between the value of a country's exports and imports.

In this context, a weak currency does not make goods more affordable for the country itself; rather, it improves the competitiveness of exports on the international market. This can lead to a reduced import demand, as imported goods become relatively more expensive for domestic consumers and businesses. Consequently, the balance of trade can improve through a higher volume of exports compared to imports.

Overall, the strengthening of export competitiveness fosters growth in a country’s balance of trade, as it favors exports over imports.