What is the difference between the depreciation of currency and - ProProfs Discuss
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What is the difference between the depreciation of currency and devaluation of currency?

This question is part of chapter four: economic principals

Asked by Cleve, Last updated: Nov 20, 2020

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John Smith

John Smith

John Smith
John Smith

Answered Sep 08, 2016

Depreciation/appreciation refers to the change in price of a currency primarily as a result of changes in demand and supply under a floating exchange rate environment. For example, when foreign countries buy canadian dollars to purchase canadian resources, the increase in demand for canadian dollars increases the value of the dollar (i.e., currency appreciation). Examples of depreciation and appreciation of the canadian dollar can be seen every day in the market place when you hear about changes in the value of the loonie. Devaluation/revaluation refers to a change in the relative value of a currency as a result of deliberate government decision to change the value of the currency under a fixed exchange rate regime. Examples of devaluation are not as common as depreciation. For more, you can enter devaluation in an internet search engine to view more information.

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