Depreciation and Appreciation (cont) Appreciation is an increase in the value of a currency relative to another currency An appreciated currency is more valuable(more expensive) and therefore can be exchanged for (can buy a larger amount of foreign currency $1→$0.90/毛 means that the dollar has appreciated relative to the euro(or e increases). It now takes only $0. 90 to buy one euro so that the dollar is more valuable The euro has depreciated relative to the dollar it is now less valuable Copyright 2012 Pearson Education. All rights reserved 14-8Copyright © 2012 Pearson Education. All rights reserved. 14-8 Depreciation and Appreciation (cont.) • Appreciation is an increase in the value of a currency relative to another currency. – An appreciated currency is more valuable (more expensive) and therefore can be exchanged for (can buy) a larger amount of foreign currency. – $1/€ → $0.90/€ means that the dollar has appreciated relative to the euro (or E $/€ increases). It now takes only $0.90 to buy one euro, so that the dollar is more valuable. – The euro has depreciated relative to the dollar: it is now less valuable