Currency depreciation has two meanings.
Currency depreciation has two meanings. The head one is inflation (the loss of expense of a currency over a time of age). The moment one is the loss of amount of one currency against another. This article explains calculate both types of currency depreciation.
Instructions
Changing Value Against Another Currency
Example:Point A--$100Point B--$120Currency depreciation=(Point B-Point A)/Point A=(120-100)/100=20 percent. To receive an modify percentage for a specific hour, a closing moderate scale at 23:59 Greenwich Mercenary Day of that interval is normally used.
2. Button down the moderate ratio after the depreciation. Conceive trustworthy the convert scale definition is the identical as you used in getting the exchange rate before the depreciation. For instance, if you looked at EUR/USD (how much in U.S. dollars a euro is worth) before the depreciation, you need to know the EUR/USD exchange rate, and not USD/EUR.
To receive a reverse exchange rate (say, to transform USD/EUR to EUR/USD), divide 1 by the exchange rate in question.
3. Take the exchange rate before and after the depreciation, subtract the smaller number from the greater, divide the result by the greater number, and multiply by 100. For instance if the EUR/USD before depreciation was 1.3 and after the depreciation became 1.2, do the following to calculate the euro depreciation:
1.3 is greater than 1.2, so we subtract 1.2 from 1.3 and get 1.3-1.2=0.1
Then we divide 0.1 by the greater exchange rate number, which is 1.3, and multiply the result by 100: 0.1/1.3 x 100 = 7.7%.
This means that over the given period, the euro depreciated against the U.S. dollar by 7.7 percent.
Changing Value Over Time (Inflation)
4. Find out how much a currency could buy at the point of time from which you want to calculate the change in the currency's value. You can take an index of products, also known as a basket of products, and evaluate how much it costs.
5. Find out how similar products cost at a later point in time. The period from the original point in time to this point in time is the period over which you will calculate currency depreciation.
6. Compare the two periods. A good way to do so is To gauge by what percentage the currency has depreciated. To do that, divide the difference between the costs of the baskets of products at different times by the initial cost of this basket. Multiply the result by 100 to receive the percentage of depreciation.
1. Asset absent the former change ratio of one currency against another. You exigency to comprehend the change degree that prevailed before the depreciation.
