Articles


Inflation it

The inflation Reasons

Rates of inflation

Inflation Types

Inflation Consequences

The Monetary depreciation

Inflation of costs

Open inflation

The Runaway inflation

Struggle against inflation

Inflation in Russia

Inflation in the USA

Inflation in Ukraine

Inflation in Zimbabwe


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Loss of a value of money

The Monetary depreciation is loss of value of currency of one country in relation to one or several solid foreign exchanges, as a rule, in system of floating rates of exchange. It occurs most often at informal increase in the exchange rate under the influence of a market situation though sometimes it is displayed simultaneously with currency devaluation. Its contrast, addition of value of money, growth of a rate of national currency is.

Monetary depreciation

The Monetary depreciation in the country falls into to depreciation of currency of this country. For example, if the Canadian dollar depreciates in relation to euro, its exchange rate (Canadian dollar to euro) grows - that is it is necessary to give more Canadian dollars for buying 1 euro (1 EUR = 1.5 CAD - 1 EUR = 1.7 CAD). When the Canadian dollar depreciates in relation to euro, it becomes more and more competitive as the price of the Canadian goods, at an exchange for euro will be cheaper that conducts to increase in the Canadian export. On the other hand, the European countries selling the goods and services in euro, will lose competitiveness to Canadian dollar. The prices for the European production in euro, thus, become more expensive in Canada.

Growth of an exchange rate of the country falls into to growth of a value of currency of this country. Continuing an example with CAD / EUR it is possible to see, if the Canadian dollar rises in price in relation to euro, the euro exchange rate falls - it is necessary to give less Canadian dollars at buying 1 euro (1 EUR = 1.5 CAD - 1 EUR = 1.4 CAD). The risen in price Canadian dollar in relation to euro becomes less competitive. That result ins to more import of the European goods and services and decrease in export of the Canadian goods and services.

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