Economic Effects of an Appreciation
An appreciation means an increase in the value of a currency. It means a currency is worth more in terms of foreign currency.
e.g. If £1 = €1 An appreciation of Pound could mean £1 =€1.2
Effects of an Appreciation
- Exports more expensive, therefore less UK exports will be demanded
- Imports are cheaper, therefore more imports will be bought.
- A fall in AD, causing lower growth.
- Lower inflation because:
- import prices are cheaper
- Lower AD and less demand pull inflation
- More incentives to cut costs
For evaluation see effects of a devaluation
Essays and Revision Notes on Exchange Rates
- Exchange Rates revision notes and essays
- Factors influencing exchange rates
- Determination of exchange rates in free markets
- Effects of Appreciation
- Effects of Depreciation
- Government Int
- Fixed Exchange Rates
- International Trade Revision Notes
- Globalisation Essays
Exchange Rate Essays
- Effects of a falling Dollar
- Why Dollar keeps falling
- Discuss Policies to Stop the Dollar Falling
- Does Devaluation Cause Inflation?



