Difference between Currency Depreciation and Currency Appreciation

Basis	Currency Depreciation	Currency Appreciation
Meaning	It refers to the decrease in the value of a domestic currency(₹) in terms of one or more foreign currencies (like $).	It refers to the increase in the value of a domestic currency (₹) in terms of one or more foreign currencies (like $).
Rupee Requirement	More rupees are needed to buy one US $.	Less rupees are needed to buy one US $.
Causes	Political Instability, Excessive Inflation, and Trade Deficit lead to Currency Depreciation.	Political Stability, Low Inflation, and Trade Surplus lead to Currency Appreciation.
Effects on imports/exports	It makes domestic goods cheaper in foreign markets as more goods can be purchased in rupees with the same amount of dollars. Thus it leads to a rise in exports.	It makes foreign goods cheaper in the domestic market as more goods can be purchased in dollars with the same amount of rupees. Thus it leads to a rise in imports.
Example	A change from 1$= ₹60 to 1$ = ₹64 represents a depreciation of the currency.	A change from 1$ = ₹64 to 1$ = ₹60 represents appreciation of the currency.

Currency Depreciation and Currency Appreciation

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#Class 12 #Commerce #Macroeconomics