Impact of exports and imports on the economy of a country
Impact of external trade on the economy of a country varies vastly based on (i) whether the currency is convertible on demand to gold/$ or it is a non-convertible fiat currency with no intrinsic value and (ii)whether the country's currency is exchanged with other countries' currencies at fixed rates or floated in the forex market, so the rates will keep reflecting the demand and supply. If it is convertible fixed exchange rate currency system, like gold standard or gold exchange standard, it requires building forex/gold reserves, as the central bank may have to buy its own currency in the foreign exchange market using its foreign currency reserves to maintain the fixed exchange rate; and the reserves should be sufficient to back the circulating currency. If it is fiat non-convertible floating exchange rate currency system, then the forex/gold reserves will not be required to back the circulating currency (as there is no promise to convert currency into gold/$ on demand) but...