Differentiate between Currency Depreciation and Currency Appreciation.
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S.No.
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Basis |
Currency Depreciation
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Currency Appreciation
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1.
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Meaning |
It refers to decrease in the value of domestic currency in terms of foreign currency.
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It refers to increase in the value of domestic currency in terms of foreign currency.
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2.
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Effect on Imports/ Exports |
It makes domestic goods cheaper in foreign country as more of such goods can now be purchased with the same amount of foreign currency. So, it leads to increase in exports.
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It makes foreign goods cheaper in domestic country as more of such goods can now be purchased with the same amount of domestic currency. So, it leads to increase in imports.
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3.
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Example: |
A change from $ 1 = ₹ 50 to $ 1 = ₹ 55 represents that Indian Rupees is depreciating.
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A change from $ 1 = ₹ 50 to $ 1 = ₹ 45 represents that Indian Rupee is appreciating.
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