Distinguish between devaluation and depreciation of domestic currency.

1.	Distinguish between devaluation and depreciation of domestic currency.
Answer» Devaluation-Under fixed exchange rate regime, reduction in price of domestic currency in terms of all foreign currencies is called Devaluation. Depreciation-Under flexible exchange rate regime, fall in market price of domestic currency in terms of a foreign currency is called Depreciation.

Answer»

Devaluation-Under fixed exchange rate regime, reduction in price of domestic currency in terms of all foreign currencies is called Devaluation.

Depreciation-Under flexible exchange rate regime, fall in market price of domestic currency in terms of a foreign currency is called Depreciation.

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Distinguish between devaluation and depreciation of domestic currency.

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