Appreciation and depreciation of currency wrt Indian economy and other economy like U.S and China

1. APPRECIATION &
DEPRECIATION
OF CURRENCY
BY- SHIV SUNDER BARIK
SECTION-A

2. Content
• What is currency?
• Indian rupee
• Appreciation of currency
• Effect of appreciation
• Example of appreciation of currency
• Depreciation of currency
• Effect of depreciation
• Example of depreciation of currency

3. What is Currency?
Currency is a generally accepted form of money,
including coins and paper notes, which is issued by a
government and circulated within an economy. Used
as a medium of exchange for goods and services,
currency is the basis for trade.

4. Indian rupee
• The Indian rupee (sign-₹,code –INR) is the official currency of
the Republic of India .The issuance of the currency is
controlled by the Reserve Bank of India.
• Current USD to INR exchange rate equals ₹69.23 per 1 US
Dollar.
• The United States dollar (sign-$, code- USD), is referred to as
the U.S dollar or American dollar .It is the official currency of
the United State and overseas territories.

5. Appreciation of Currency
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.

7. Real World Example of Currency Appreciation
Beginning 1981, the Chinese currency rose steadily against the
dollar until 1996, when it plateaued at a value of 1 dollar equaling
8.28 yuan until 2005. The dollar remained relatively strong during
this period. It meant cheaper manufacturing costs and labor for
American companies, who migrated to the country in droves. It also
meant that American goods were competitive on the world stage as
well as the United States due to their cheap labor and manufacturing
costs. In 2005, however, China's yuan reversed course and
appreciated 33% in value against the dollar.

8. Depreciation of Currency
Currency depreciation is a fall
in the value of a currency with
respect to other currency.
Currency depreciation can
occur due to factors such as
economic fundamentals,
political instability or risk
aversion among investors.

10. Recent Example of Currency Depreciation –
Turkish Lira
Turkey’s currency, the lira, lost more than 40% of its value against the USD
between January and August 2018. A combination of factors led to the
depreciation. Firstly, investors grew fearful that Turkish companies
wouldn't be able to pay back loans denominated in dollars and euros as
the lira continued to fall in value. Secondly, President Trump approved the
doubling of steel and aluminum tariffs imposed on Turkey at a time when
there were already fears about the country’s struggling economy. The lira
plunged by as much as 20% after Trump released the news via a tweet.
The country didn't have a sufficient amount of U.S. dollars to defend its
currency on foreign exchange markets. Turkey's central bank finally lifted
interest rates in September 2018 from 17.75% to 24% to stabilize its
currency and curb inflation.

11. Thank You