Impact of currency depreciation and appreciation on exports and imports

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Hi! Today we will learn the effects of currency depreciation and currency appreciation on domestic imports and exports.

What do we mean by appreciation and depreciation of the currency?
Let us understand by taking the example of the Indian rupee. The value of the Indian Rupee is driven by the demand and supply forces of the currency market. If the demand for rupees relative to other currencies is high, its value increases. This is called 'appreciation of the rupee'. And if the demand for rupees relative to other currencies is low, its value decreases. This is called 'depreciation of the Rupee'. So our takeaway point is: The value of a currency decreases when the supply of that currency is more than its demand. And the value of a currency increases when the demand for that currency is more than its supply.

#rupee #dollar #india #usa
#economics #upscexam
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