What does a currency depreciation mean?

📘 Briefly explained A depreciation of a currency means that the value of that currency falls compared with other currencies or with a reference value such as gold. This makes imports more expensive because more units of one’s own currency must be paid for foreign goods. At the same time, exports become cheaper for buyers abroad, which can increase the competitiveness of domestic products. Domestically, a depreciation often leads to higher prices for imported goods and thus to a rise in inflation. In addition, foreign travel and foreign loans can become more expensive, while debts in foreign currency increase in real burden. A depreciation can be politically intended in order to support one’s own economy, but it also carries risks for purchasing power and confidence in the currency. 🔍 Why this matters The depreciation of a currency refers to the decline in its value relative to other currencies or a reference standard such as gold …