Final answer:
Currency exchange rates do have an impact on firms. They affect the competitiveness and profitability of firms operating in international markets, as well as the cost of imports and exports.
Step-by-step explanation:
Yes, currency exchange rates do have an impact on firms. When the exchange rate of a currency changes, it affects the competitiveness and profitability of firms that operate in international markets.
For example, if a firm exports goods or services to another country, a stronger currency in that country can make the firm's products more expensive for foreign buyers, potentially reducing demand. Conversely, a weaker currency can make the firm's products more affordable for foreign buyers and increase demand.
In addition, exchange rates can affect the cost of raw materials, production inputs, and financing for firms that import goods or rely on foreign suppliers. A stronger domestic currency can reduce import costs, while a weaker domestic currency can increase import costs.