Explain how depreciation of currency promotes exports a country.

dear Student

Depreciation of currency means fall in the value of domestic currency in terms of foreign currency. For e.g. If earlier Rs 60 was equal to $1 and now it is Rs 65 for $1 then rupee has depreciated by Rs 5. Depreciation of currency means that, now it is expensive for the domestic currency to buy foreign currency and is relatively cheaper for foreign country to buy domestic currency. Therefore, exports increases due to cheaper prices and imports decreases due to expensive foreign prices.


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