Differentiate between devaluation and depreciation.

1.	Differentiate between devaluation and depreciation.
Answer» Deprecation of a currency means a decrease in the price of the domestic currency in terms of the foreign currency. Depreciation of a currency takes place due to working of demand and supply forces in foreign exchange market. Devaluation also signifies a loss of value of the currency of a country relative to other foreign currency but it in a process in which government deliberately cheapen its own currency in terms of other currency.

Answer»

Deprecation of a currency means a decrease in the price of the domestic currency in terms of the foreign currency. Depreciation of a currency takes place due to working of demand and supply forces in foreign exchange market.

Devaluation also signifies a loss of value of the currency of a country relative to other foreign currency but it in a process in which government deliberately cheapen its own currency in terms of other currency.

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Differentiate between devaluation and depreciation.

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