Answer:
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Step-by-step explanation:
When a nation's currency appreciates, its exports become more expensive and less competitive, while imports become cheaper. This is because an appreciation of the currency means that it can buy more foreign currency than before, increasing the purchasing power of the domestic currency.
As a result, this change in currency value will make foreign products less expensive, encouraging consumers to purchase more foreign goods. On the other hand, domestic products become more expensive and less attractive for foreign customers, reducing the exports of the nation.
Therefore, an appreciating currency tends to reduce the demand for exports, decrease the demand for domestic currency, and increase the trade deficit.