Impact Of Foreign Currencies On The Nation’s Economy And Labour Market

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Om Kumar Pandey, LLB, Techno India University

ABSTRACT

Through exchange rate changes, foreign currencies significantly influence a country's economy and labour market. These changes affect employment levels, foreign direct investment (FDI), inflation, and trade balances. Though it makes exports less competitive and may cause job losses in export- dependent sectors, a strong domestic currency increases buying power and lowers import costs. On the other hand, a weaker currency increases exports and promotes economic growth while also causing inflation and higher living expenses. Currency movements directly impact the labour market as exchange rate volatility affects wages, job creation, and labour migration. A falling currency usually leads to more inflation, which lowers actual salaries and lessens workers' buying power. Decisions on foreign investment are also connected to currency stability; investors choose stable economies to reduce their risk exposure. This research paper evaluates and examines the impact of foreign currencies on the Nation’s economy and labour market.

Keywords: Foreign currency, exchange rates, economy, inflation, trade balance, employment, labour market, foreign direct investment, monetary policy, fiscal policy, purchasing power, economic stability, capital flows.

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