Foreign Exchange Rate — Flashcards

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Foreign exchange means all currencies other than the domestic currency of a country. For India, US Dollar, British Pound, Kuwaiti Dinar, Pakistani Rupee, and other foreign currencies are foreign excha…

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The rate of exchange is the price at which one currency is exchanged for another currency. It shows the value of one currency stated in terms of another currency. Example: $1 = ₹60 or ₹1 = 1/60.

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Foreign exchange rate shows the external value of a currency. It expresses how much of another currency can be obtained for one unit of a currency.

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Depreciation is a fall in the free market value of domestic currency in terms of foreign currency under a flexible exchange rate system. It happens due to market forces, not government action. Example…

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Appreciation is a rise in the free market value of domestic currency relative to foreign currencies under a flexible exchange rate system. It happens due to market forces. Example: $1 = ₹62 changes to…

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Devaluation is a government action to decrease the value of domestic currency relative to foreign currencies under a fixed exchange rate system. Example: $1 = ₹60 changes to $1 = ₹62 through official …

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Revaluation is the official action of the government to appreciate the external value of its currency under a fixed exchange rate system. Example: $1 = ₹60 changes to $1 = ₹55 through official action.

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Depreciation is a market-driven fall in the value of domestic currency under flexible exchange rates. Devaluation is a deliberate government action to reduce the value of domestic currency under fixed…