ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -When a currency appreciates, the exports from a country that use that currency will decrease because all of those goods are more expensive to countries other currencies.

Detailed explanation-2: -Currency appreciation is an increase in the value of one currency in relation to another currency. Currencies appreciate against each other for a variety of reasons, including government policy, interest rates, trade balances, and business cycles.

Detailed explanation-3: -When a country’s currency appreciates in relation to foreign currencies, foreign goods become cheaper in the domestic market and there is overall downward pressure on domestic prices. In contrast, the prices of domestic goods paid by foreigners go up, which tends to decrease foreign demand for domestic products.

Detailed explanation-4: -Numerous factors influence exchange rates, including a country’s economic performance, the outlook for inflation, interest rate differentials, capital flows and so on. A currency’s exchange rate is typically determined by the strength or weakness of the underlying economy.