Increase in exchange rate implies that the price of foreign currency in terms of domestic currency has increased. This is called as ____________ of domestic currency in terms of foreign currency.

Depreciation

The correct answer is Depreciation.

An increase in exchange rate implies that the price of foreign currency in terms of domestic currency has increased. This is called depreciation of domestic currency in terms of foreign currency.

Depreciation occurs when the value of a country's currency decreases relative to another currency. This means that it will take more of the domestic currency to purchase a unit of the foreign currency.