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The Asean Currency Crisis : Its Impact On The Coconut Industry

The currency crisis has triggered competitive devaluation in this region of the world. Theoretically devaluation has its upside and downside. The upside being the lowering of prices of the devaluing country vis-a-vis other countries which would give its exported products a comparative advantage. The downside of course would be the higher cost of imports. Actually the advantage of devaluation depends upon both the supply and demand elasticities of its product - that is to say the response of suppliers and buyers of a commodity respectively to price changes. The elasticity of demand for products as coconuts or other fats and oils depends heavily on two other elasticities - the income elasticity of demand and the elasticity of substitution.

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