Question

When the value of Indian rupee falls in relation to American dollar under flexible exchange rate system, it is a situation of ______.

Options

• Appreciation of rupee

• Depreciation of rupee

• Revaluation of Indian rupee

• None of these

Answer 1

When the value of Indian rupee falls in relation to American dollar under flexible exchange rate system, it is a situation of Depreciation of rupee.

Explanation:

Under a flexible exchange rate, a fall in the market value of the rupee relative to the dollar is called depreciation. Revaluation is not used for a market-driven change, and the rupee has not appreciated.