IELTS Writing Task 2 Sample Essays: How Exchange Rates Impact International Trade and Imports (With Band 6, 7, 8 Examples)

Exchange rates and their effects on international trade represent a significant topic in IELTS Writing Task 2, particularly in questions about economics and globalization. This topic has appeared multiple times in recent years, especially in questions discussing impact of international trade on local agricultural practices.

Analysis of a Recent IELTS Task 2 Question

Some people believe that fluctuating exchange rates have a negative impact on international trade and imports. To what extent do you agree or disagree with this statement? Give reasons for your answer and include relevant examples from your knowledge or experience.

Question Analysis

• Topic: Economics/International Trade
• Task: Agree/Disagree
• Key points to cover:
  • Relationship between exchange rates and trade
  • Impact on imports and exports
  • Effects on businesses and consumers
  • Possible solutions or adaptations

Sample Essay 1 (Band 8.0)

Currency exchange rate fluctuations undeniably influence international trade dynamics, and while I largely agree that these variations can pose challenges, their impact is not exclusively negative. This essay will examine both the adverse effects and potential benefits of exchange rate movements on global commerce.

Exchange rate volatility can indeed create significant obstacles for international trade. When currencies fluctuate unpredictably, businesses face increased uncertainty in pricing their products and managing costs. For instance, a sudden appreciation of the US dollar might make American exports more expensive in foreign markets, potentially reducing demand and affecting profit margins. Similarly, as highlighted in studies about the effects of global trade agreements on local agriculture, currency fluctuations can dramatically impact food security and agricultural trade.

However, exchange rate movements can also offer opportunities and benefits. When a country’s currency depreciates, its exports become more competitive in global markets, potentially boosting export-oriented industries and creating jobs. Furthermore, these fluctuations can encourage businesses to develop more sophisticated risk management strategies and diversify their markets, ultimately creating more resilient trading relationships.

Moreover, exchange rate flexibility serves as an important economic adjustment mechanism. It helps countries adapt to changing economic conditions and maintain their competitive position in global markets. This aspect is particularly relevant when considering the influence of international trade on food security, as it allows agricultural markets to adjust to global supply and demand changes.

In conclusion, while exchange rate fluctuations present challenges for international trade, their impact is more nuanced than purely negative. The key lies in how well businesses and economies adapt to and manage these variations.

Currency exchange rates displayed on electronic board showing market fluctuations

Sample Essay 2 (Band 6.5)

Exchange rates changes have become a big problem in international trade today. I agree that these changes mostly have negative effects on trade between countries.

First, when exchange rates go up and down, it makes it hard for companies to plan their business. For example, if a company in Vietnam wants to import machines from Japan, they might have to pay more money if the Japanese yen becomes stronger. This makes it difficult to know how much things will cost in the future.

Another problem is that these changes can hurt small businesses more than big ones. Big companies have more money and ways to protect themselves from exchange rate changes, but small businesses often lose money when currencies change too much. This situation affects many developing countries, similar to how impact of international tourism on currency demand creates challenges for local economies.

However, sometimes exchange rate changes can help countries sell more things to other countries. When a country’s money becomes cheaper, other countries might buy more from them because the prices seem lower. But this benefit is usually short-term and can cause other problems.

In conclusion, I think exchange rate changes mostly hurt international trade because they make business harder to predict and can cause losses for companies, especially smaller ones.

Vocabulary Analysis

1. fluctuate (v) /ˈflʌktʃueɪt/ – to change frequently in level, amount, quality, etc.
2. volatility (n) /ˌvɒləˈtɪləti/ – tendency to change rapidly and unpredictably
3. appreciation (n) /əˌpriːʃiˈeɪʃn/ – increase in value
4. competitive position (n) /kəmˈpetətɪv pəˈzɪʃn/ – relative standing against competitors
5. risk management (n) /rɪsk ˈmænɪdʒmənt/ – practice of identifying and controlling threats
6. resilient (adj) /rɪˈzɪliənt/ – able to recover quickly from difficulties
7. nuanced (adj) /ˈnjuːɑːnst/ – characterized by subtle differences

Practice Suggestions

Try writing your own essay on these related topics:

1. The role of digital currencies in international trade
2. How trade barriers affect developing economies
3. The importance of stable exchange rates for economic growth

Share your practice essays in the comments section for feedback and discussion with fellow IELTS candidates.