Why does a stronger currency have a tightening effect on economic conditions?
Tight monetary policy reduces the amount of money available in the economy and strengthens the currency. It is usually implemented by raising interest rates, increasing capital requirements for banks, or sometimes selling government bonds.

When there is less money and credit to go around, business activity slows down, economic growth slows down. Businesses that could have expanded by taking out loans do not do so; consumers who could have purchased more with their credit cards can't do so; investors who could have invested more money into businesses (equities) put the money into government bonds.