Last week the rupee appreciated 8 paise to 72.86 against the US dollar in opening trade.

                       LEARNING WITH TIMES     :   BASICS

Exchange rate is the price of foreign currency (USD, Yen, Euro, Pound etc) in terms of domestic currency (rupee) i.e. amount of domestic currency needed to buy one unit of foreign currency.  If currently price of 1$ =  53, which means $ 1 be purchased in exchange of  53 rupee. Exchange rate tells us the value of domestic currency in relation to one unit of foreign currency.

Rupee prices keep fluctuating all the time. Sometimes we need more rupees to buy one unit of foreign currency and sometimes we need fewer rupees to buy one unit of foreign currency. This change in rupee price is known as rupee Appreciation or Depreciation.

Rupee appreciation is when value of rupee increases (becomes expensive) and fewer rupees can buy one unit of foreign currency. Say rupee has appreciated as 1$ can buy fewer INR.  If Rupee APPRECIATES

Imports become cheaper; Exporters will earn lower revenue’

Rupee depreciation is when rupee value decreases (becomes less expensive) and more rupees can buy one unit of foreign currency. This is also known as weakening of rupee as now INR worth is less than foreign currency. If Rupee DEPRECIATES

Imports become costly; Exporters will have higher revenue