Currency appreciation / depreciation.

In plain English

Appreciation and depreciation describe a currency getting stronger or weaker against another currency through ordinary trading in the foreign exchange market. If the dollar appreciates against the yen, one dollar buys more yen than it did, so Japanese goods get cheaper for American buyers and American goods get pricier for Japanese buyers. Depreciation runs the other way. The moves come from trade flows, interest rate differences, and expectations rather than from an official announcement. Which way you quote the pair matters, because the same move looks like a rise in one quote and a fall in the flipped quote.

01Why it matters

A stronger home currency stretches your money on imports and foreign travel while squeezing exporters and the profits companies earn abroad, and a weaker one flips both effects.

02The math, step by step

Say one dollar buys 100 units, then buys 110. The dollar appreciated 10 percent. An 1,100 unit hotel night that cost 11 dollars now costs 10 dollars. From the other side the unit fell from 0.0100 dollars to about 0.0091, roughly a 9 percent fall, so the two percentages do not match.

Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.

03What this is NOT

04Receipts

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