Depreciation of the South African Rand occurs when the exchange rate changes from:
(i) 16.21 South African rands per euro to 15.59 South African rands per euro.
(ii) 16.21 South African rands per euro to 17.01 South African rands per euro.
(iii) 0.06 euro per South African rand to 0.07 euro per South African rand.
(iv) 0.06 euro per South African rand to 0.054 euro per South African rand.

Question

Quizplus · Accepted Answer

Depreciation of a currency occurs when the exchange rate decreases, meaning that it takes more units of the domestic currency to purchase one unit of the foreign currency. Hence, options (i) and (iii) are incorrect as they show an appreciation of the South African rand. Option (iv) shows a depreciation of the South African rand as it now takes more euros to purchase one rand. Option (ii) also shows depreciation as it now takes more South African rands to purchase one euro. Therefore, the correct answer is (ii) and (iv).

Depreciation of the South African Rand Occurs When the Exchange