Question

If the nominal exchange rate was one U.S. dollar for 115 Japanese yen and then changed to one dollar for 112 Japanese yen, we could accurately state that the dollar depreciated in relation to the yen and the yen appreciated in relation to the dollar.

True or False?

Answer 1

Exchange rate is the rate at which one Currency is exchanged with other.

The nominal exchange rate tells how much foreign currency can be exchanged for a unit of domestic currency

Depreciation of Currency is the loss of value of a Country's currency in terms of one or more foreign currency and

Appreciation of Currency is the Increase of value of Country's currency in terms of one or more foreign currency

Now, Given that Earlier,.

1 US Dollar = 115 Yen

And Later, 1 US Dollar = 112 Ye

The US dollar was earlier exchange for 115 yen and then, US dollar is exchanged for 112 yen which means that Dollar is now exchanged for less other Currency,that is ,Yen. So,the value of US dollar is depreciated

On the same hand, Earlier, 1 Yen was Exchanged for 1/115 dollars and then, 1 Yen is exchanged for 1/112 dollars which means that earlier Yen has less dollars and now, Yen is Exchange for more other Currency,that is, US dollar which means that the value of Yen is Increased or Appreciated.

Thus, It is true and Can be accurately stated that the dollar depreciated in relation to the yen and the yen appreciated in relation to the dollar