Depreciation and Appreciation (cont) a depreciated currency is less valuable, and therefore it can buy fewer foreign produced goods that are denominated in foreign currency A Nissan costs *2, 500,000= $25,000 at Es/=0.01 becomes more expensive $27, 962.50 at Es/y=0.011185 a depreciated currency means that imports are more expensive and domestically produced goods and exports are less expensive a depreciated currency lowers the price of exports relative to the price of imports.(China?) Copyright G 2012 Pearson Education. All rights reserved 14-9Copyright © 2012 Pearson Education. All rights reserved. 14-9 Depreciation and Appreciation (cont.) • A depreciated currency is less valuable, and therefore it can buy fewer foreign produced goods that are denominated in foreign currency. – A Nissan costs ¥2,500,000 = $25,000 at E$/¥=0.01 – becomes more expensive $27,962.50 at E$/¥= 0.011185 • A depreciated currency means that imports are more expensive and domestically produced goods and exports are less expensive. • A depreciated currency lowers the price of exports relative to the price of imports. (China?)