Share

# What is 'Appreciation' of Domestic Currency? What is Its Likely Effect on Exports and How? - CBSE (Arts) Class 12 - Economics

ConceptConcept of Foreign Exchange Rate

#### Question

What is 'appreciation' of domestic currency? What is its likely effect on exports and how?

#### Solution

Currency appreciation means the value of domestic currency becomes costlier in terms of foreign currency. For example, if the exchange rate for $1 = Rs 50 decreases to$1 = Rs 45, then the export of goods to foreign countries will become costlier. This implies that the rupee value is appreciated against the dollar. So, the goods worth Rs 48 for \$1 only get exported, and hence, there is a decrease in the demand for exports.

Is there an error in this question or solution?

#### Video TutorialsVIEW ALL [1]

Solution What is 'Appreciation' of Domestic Currency? What is Its Likely Effect on Exports and How? Concept: Concept of Foreign Exchange Rate.
S