Appreciation and Depriciation of Currency

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Appreciation and Depriciation of Currency

  1. 1. 1
  2. 2.  Floating Exchange Rate Fixed Exchange Rate Managed-Floating Exchange Rate
  3. 3.  A currency is free-floating if its exchange rate is allowed to vary against that of other currencies Determined by the market forces of supply and demand Exchange rates for such currencies are likely to change almost constantly as quoted on financial markets, mainly by banks, around the world
  4. 4.  A movable or adjustable peg system is a system of fixed exchange rates With a provision for the devaluation of a currency e. g. Chinese Yuan renminbi (RMB) was pegged to the United States dollar at RMB 8.2768 to $1from 1994 to 2005
  5. 5.  An exchange rate system which is based on the free float but with the intervention of the Central Bank. Central bank keep the rate at a fixed price by using its different tools and methods
  6. 6.  Appreciation of Currency means increasing the value of currency in terms of others international currencies based on demand and supply. Depreciation of currency means reduction in the value of currency in terms of other international currencies based on demand and supply.
  7. 7.  Devaluation of currency means the planed reduction in the value of currency by the Govt. based on the fixed exchange rate. Revaluation of currency means the planed increase in the value of currency by the Govt. based on fixed exchange rate.
  8. 8.  1 Economic factor 2 Political factors 3 Market psychologies
  9. 9.  Monetary policies of the central bank Health of an economy Trade policies Currency inflation and deflation The Balance of Payments The Law and Order situation
  10. 10.  The Political Stability The Market Trends The Relative Inflation Rates The Relative Interests Rates The amount of Investments in the country The Foreign remittances
  11. 11. Thanks

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