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In a given situation where a local currency becomes very strong compared to other major currencies (like the USD, EUR, etc...), should the government / central bank leverage the opportunity to print money and fund infrastructure / public projects with it?

On the surface that looks like a good opportunity to "kill two birds with one stone" - you get "free" money to fund projects while applying down pressure on the currency (high exchange too high can hurt exporters). What undesired effect am I missing?

The specific example in mind is Israel where the Shekel is very strong right now compared to the US dollar...

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  • $\begingroup$ As pointed by Giskard's answer, there is no way how economics can answer the should question. For example, science/evidence is crystal clear on the health benefits of exercising. Should you exercise? That is value question, and science cannot really answer value questions. Maybe you should never exercise, maybe governments should pursue policies that keep every person as poor as possible. Who is to say these goals would be wrong other than moral philosophers? Moral questions belong to Philosophy.se, not Economics.se. Please consider editing your question to make sure its about economics $\endgroup$
    – 1muflon1 ♦
    Nov 27, 2021 at 13:53

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"Should" is not a good word to use in this context, it implies a generally agreed upon norm. There are always several upsides and downsides, and it is difficult to assess these in a given moment, without assessing the planned trajectory of a currency exchange.

An example of a downside of depreciation, since you seem to be asking for such, is that a strong Shekel benefits Israeli consumers of foreign goods and services.

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