What is the difference between depriciation and devaluation of currency?
While both devaluation and depreciation implies that the domestic currency (say Rupees) has become less expensive in terms of foreign currency (say US Dollar). However, they differ on the ground that wile on one hand, devaluation is practiced under fixed exchange rate regime, on the other hand, depreciation is said to take place under flexible exchange rate regime. That is, devaluation is said to take place when the monetary authority deliberately reduces the value of domestic currency against the foreign currency. On the other hand, depreciation is said to take place when the value of currency falls under a flexible exchange rate regime, i.e. due to market forces of demand and supply of foreign currency.