PESO DEPRECIATION
Peso Depreciation
Currency Depreciation - is the loss of value of a country's currency with respect to one or more foreign reference currencies, typically in a floating exchange rate system. Currencies are not equal to one another in their value and thus purchasing power. Most but not all currencies, can and do experience changes in their values compared to other currencies, this being called appreciation when their value increases and depreciation when their value decreases. Peso depreciation means that one of the currencies called pesos -- which is the currency in several former Spanish colonies, including Mexico -- have decreased in value compared to one or more circulating currencies.
Factors That Can Affect the Appreciation or Depreciation of Currency
The value of currency in any country rarely stays constant. Currency values usually continuously fluctuate. These fluctuations can be large or small depending on the current economic and political state of the country. Though the appreciation or depreciation of a currency occurs for a number of different reasons, some of the most common reasons are supply and demand, inflation and economic outlook.
* Supply and Demand
Changes in availability of products and goods will lead to price changes. whenever new currency enters the economy, the total supply also increases. when there is a lot of money in the market to work with, the demand tends to go down, thus the value will fluctuate depending on the availability of money in the economy. Foreign investors have big role in this type of change.
*Inflation and Deflation
Inflation occurs when the general prices of goods and services in a country increase. Inflation causes the value of the peso to depreciate, reducing purchasing power.
Deflation occurs when the general prices of goods and services go down. Deflation increases the purchasing power of money and causes its value to appreciate. Deflation generally occurs at times when an economy is experiencing slow or
Currency Depreciation - is the loss of value of a country's currency with respect to one or more foreign reference currencies, typically in a floating exchange rate system. Currencies are not equal to one another in their value and thus purchasing power. Most but not all currencies, can and do experience changes in their values compared to other currencies, this being called appreciation when their value increases and depreciation when their value decreases. Peso depreciation means that one of the currencies called pesos -- which is the currency in several former Spanish colonies, including Mexico -- have decreased in value compared to one or more circulating currencies.
Factors That Can Affect the Appreciation or Depreciation of Currency
The value of currency in any country rarely stays constant. Currency values usually continuously fluctuate. These fluctuations can be large or small depending on the current economic and political state of the country. Though the appreciation or depreciation of a currency occurs for a number of different reasons, some of the most common reasons are supply and demand, inflation and economic outlook.
* Supply and Demand
Changes in availability of products and goods will lead to price changes. whenever new currency enters the economy, the total supply also increases. when there is a lot of money in the market to work with, the demand tends to go down, thus the value will fluctuate depending on the availability of money in the economy. Foreign investors have big role in this type of change.
*Inflation and Deflation
Inflation occurs when the general prices of goods and services in a country increase. Inflation causes the value of the peso to depreciate, reducing purchasing power.
Deflation occurs when the general prices of goods and services go down. Deflation increases the purchasing power of money and causes its value to appreciate. Deflation generally occurs at times when an economy is experiencing slow or