Question

What is meant by depreciation of domestic currency?

Answer 1

Currency depreciation implies that domestic currency has become less expensive in terms of foreign currency. If, in the initial situation. $\$1=Rs.40$
and in the final situation, $\$1=50$ then,
rupee is depreciating against dollar. This is because now $\$1$ can be used to purchase Rs 50 instead of Rs 40. Thus, rupee has become less expensive.