If domestic cost, mostly labor, does not adjust to the higher import prices resulting from the depreciation, exporters will gain, but this gain comes from reducing the real incomes of domestic workers. If these workers ultimately negotiate an increase in nominal wages to bring their real wages back up to before the depreciation, the gain to exporters will disappear. The depreciation has created only a temporary gain.
Few journalists seem to understand that a policy to reduce the foreign exchange value of a currency is, in reality, a policy to transfer wealth from workers — the middle class and the poor — to the wealthier owners of export industries. It is another example of the central bank acting as a reverse Robin Hood, taking from the have-nots to give to the haves.
Furthermore, there are many other indirect effects that make depreciating your currency a very bad policy objective. Mises explained that standard balance-of-payment accounting cannot be used when the unit of account is being distorted. Even if exporters are more profitable, this is not something to cheer if a higher nominal profit means lower real profit.
Mises Daily Friday: Does Devaluing Currency Help Us All by Helping Exporters?
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