The rate of exchange of a nation's currency has a noticeable effect upon the competitive advantages or disadvantages of its companies.

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When a nation's currency is strong, its companies may face disadvantages in terms of exporting their products, as their prices will seem higher in comparison to those of companies in nations with weaker currencies. Conversely, when a nation's currency is weaker, its companies may enjoy advantages in terms of exporting their products, as their prices will seem lower in comparison to those of companies in nations with stronger currencies. Therefore, the rate of exchange has a significant impact on the competitive advantages or disadvantages of a nation's companies.

The Rate of Exchange of a Nation's Currency Has a Noticeable