Question

how to stop currency from depreciating?

how to stop currency from depreciating?

Homework Answers

Answer #1

There are many ways in which we can stop depreciation of a currency but i am mentioning two of them--

1) Export more and import less -

when a country export more and import less then it runs trade surplus. And in the foreign market there is demand of country's export. The buyers will seek your currency to pay for those products. Thus, its demand increases, and the currency becomes more valuable.

2) By keeping small budget deficit.

When country's expenditure exceeds income, central bank of the country print more money to finance the deficit. And when the supply of money increases then it's value decreases.

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