Appreciation and Depreciation of currency
- Appreciation simply means increase in the value of domestic currency with respect to the other currency which is usually US dollars
1$ = 70 INR 1$ = 65 INR
- Depreciation simply means decrease in the value of domestic currency with respect to the other currency which is usually US dollars
1$ = 70 INR 1$ = 75 INR
- What causes fluctuation in thecurrency
Reasons for Depreciation
- Sudden outflow of dollar on account of High import
- sell off in equity market
Effect of Depreciation on Indian Economy
- Widening of Current Account Deficit
- Depleting forex reserves
- Exports becomes cheaper and competitive in global market.
Reasons for Appreciation
- Sudden inflow of dollar due on account of investment in stock market
- Increase in exports of the country.
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