When one currency appreciates, another currency must depreciate.

Name: When one currency appreciates, another currency must depreciate.
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Question

Quizplus · Accepted Answer

This statement is true in a fixed exchange rate system, where the value of a currency is fixed to another currency or a commodity. However, in a floating exchange rate system, where the value of a currency is determined by supply and demand in the foreign exchange market, both currencies can appreciate or depreciate against each other.

When One Currency Appreciates, Another Currency Must Depreciate