Another piece of lore you may be familiar with is a bit more specific as it applies to a country’s currency value. You tend to here this often (usually from people who actually have no need to trade currencies for a living):
A country’s exports will suffer when the relative value of its currency strengthens; therefore a country’s exports will grow when the relative value of its currency weakens.
There’s only one problem with this line of reasoning—it doesn’t seem to hold water in the real world.
I place into evidence for your consideration four charts (below) which include two different price series: 1) The actual trade balance (gold); and 2) the value of the local currency (red). I have included the US, Japan, Germany, and China. The time frame is from early 1992 through the most current month of trade balance recorded for each country. This period encompasses two full cycles of the dollar index, i.e. bull market from early 90s to 2002, bear market to 2008, and what I believe is a bull market lasting until a yet-to-be-determined date (let’s just say I lack certainty) ...