What happens to net exports when interest rates go up?
Answer (1)
Net exports go down. When interest rates in the Philippines rise, it can cause the peso to strengthen. A stronger peso makes local products more expensive for foreign buyers and makes imported products cheaper for Filipinos. For example, if a Filipino exporter sells abaca rope to Germany, but the peso appreciates, the German buyer will have to pay more. That could discourage exports and encourage more imports, leading to a lower net export value.
