ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Currency depreciation, in the context of the U.S. dollar, refers to the decline in value of the dollar relative to another currency. Easy monetary policy by the Fed can weaken the dollar when investment capital flees the U.S. as investors search elsewhere for higher yield.

Detailed explanation-2: -The Negative Effects From a Weak Dollar Not only does a weaker dollar lead to higher commodity prices, it also drives up the prices of imported goods, which adds to pressures on consumer spending and could lead to higher wage demands.

Detailed explanation-3: -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-4: -The value of the Indian Rupee against the US dollar works on the basis of supply and demand. When the demand for the US dollar increases, the Indian Rupee depreciates and vice versa. When a country imports more than it exports, the demand for dollars exceeds the supply and local currencies such as the Indian Rupee.