In which of the following situations will domestic currency be said to be depreciated?
Answer & explanation
Correct answer: option 2
Suppose, one dollar = 40 rupees and increase in value of foreign currency in terms of domestic currency means now one dollar = 60 rupees (say). So, one rupee = 1/40 dollar and now one rupee = 1/60 dollar. So Indian rupee i.e. domestic currency has depreciated.