13 The Importance of Exchange Rates When a country's currency appreciates (rises in value relative to other currencies), the country's goods abroad become more expensive and foreign goods in that country become cheaper(holding domestic prices constant in the two countries). Conversely when a country's currency depreciates, its goods abroad become cheaper and foreign goods in that country become more expensive.1.3 The Importance of Exchange Rates  When a country’s currency appreciates (rises in value relative to other currencies), the country’s goods abroad become more expensive and foreign goods in that country become cheaper (holding domestic prices constant in the two countries). Conversely, when a country’s currency depreciates, its goods abroad become cheaper and foreign goods in that country become more expensive