The balance of supply and demand for foreign exchange determines the foreign exchange rate of a currency.
When a country's foreign exchange rate has declined relative to that of another country, we say that the domestic currency has depreciated while the foreign currency has appreciated.
When a country's official exchange rate is lowered we say that the currency has undergone a devaluation.
Three major exchange rate systems are the gold standard, pure floating exchanged rates and managed floating exchange rates.
References
Paul Samuelson and William D. Nordhaus, Economics, 13th Edition, McGraw-Hill, 1989
UC Berkeley Lecture
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When a country's foreign exchange rate has declined relative to that of another country, we say that the domestic currency has depreciated while the foreign currency has appreciated.
When a country's official exchange rate is lowered we say that the currency has undergone a devaluation.
Three major exchange rate systems are the gold standard, pure floating exchanged rates and managed floating exchange rates.
References
Paul Samuelson and William D. Nordhaus, Economics, 13th Edition, McGraw-Hill, 1989
UC Berkeley Lecture
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