Appreciation and Depreciation of Rupee & Impact on the Economy? – Concept of Economy – Free PDF

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.

Indian Economy | Free PDF

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