Difference between Devaluation and Depreciation of Domestic Currency Class 12
Looking for the what is the difference between devaluation and depreciation of domestic currency as the per the syllabus of class 12 CBSE Board and other states Board.
This topic is concerned with the Foreign Exchange Rate Chapter of Macroeconomics class 12.
Let’s discuss it.
Depreciation vs Devaluation
| Depreciation | Devaluation |
| It refers to the reduction of the value of the domestic currency in the international money market, because of the market forces of supply and demand. | It refers to the reduction of the value of the domestic currency in the international money market when the value of the domestic currency is deliberately reduced by the government by raising the exchange rate. |
| Government plays no role in it. | Government plays a major role in it. |
| Market forces play a main role in it | Market forces do not play any role in it. |
