What is the main effect of a stronger currency on a country's exports?

A stronger currency typically leads to a decrease in a country's exports because goods priced in that currency become more expensive for foreign buyers. When the currency appreciates, it means that it takes more of the foreign currency to buy the same amount of goods priced in the stronger currency. This often results in reduced competitiveness for those goods in international markets, as foreign consumers or businesses might turn to cheaper alternatives from countries with weaker currencies.

For example, if a U.S. dollar strengthens against the euro, European consumers might find American products too expensive compared to local or other foreign goods, resulting in a drop in demand for U.S. exports. Hence, the main effect of a stronger currency is that it generally diminishes export levels due to heightened prices for foreign buyers.