ECONOMICS
FOREIGN CURRENCY MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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If Rupees 150 required to buy $ 3, instead of rupees 80 for $2 earlier, then:
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Domestic currency has depreciated
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Domestic currency has appreciated
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All of the above
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None of these
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Explanation:
Detailed explanation-1: -What Is Currency Depreciation? Currency depreciation is a fall in the value of a currency in terms of its exchange rate versus other currencies. Currency depreciation can occur due to factors such as economic fundamentals, interest rate differentials, political instability, or risk aversion among investors.
Detailed explanation-2: -b) Depreciation of domestic currency for me would imply that there is an increase in the domestic currency price to buy one unit of US currency (US dollars) for exmaple, if price of one dollar rises from Rs 55 to Rs 62, it will increase the cost of education in USA (implying more expenditure/burden on my parents).
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