Final answer:
Resistance to exchange rate fluctuations exists because they can cause investor uncertainty, and change the prices of imports and exports, which affects international trade flows. Governments may intervene to stabilize exchange rates and minimize trade disruptions.
Step-by-step explanation:
Resistance to exchange rate fluctuations exists because changes in the value of a currency can lead to several issues that affect economic stability and trade. Firstly, fluctuations cause uncertainty for people who invest in world markets. This uncertainty can deter investment and affect the overall economic climate. Secondly, it alters the price of imports and exports, which can dramatically affect trade balances and the profitability of companies engaged in international trade.
For example, if a country's currency depreciates, imports become more expensive, and exports become cheaper to foreign buyers. This can be both beneficial and detrimental, depending on the economic structure and trade dependencies of the country in question. On the other hand, a stronger currency makes imports cheaper but can hurt export competitiveness.
Considering these impacts, it is clear that changes in exchange rates can: cause uncertainty for investors, alter the price of imports, alter the price of exports, or all of the above. Governments and central banks often intervene to minimize these disruptions, especially when trade constitutes a significant portion of a nation's GDP.