Question

What are the impacts of depreciation of currency on the economy of the nation?
Who take care of prevention and correction of depreciation?

Please give original answers and no copy-pasting .

Answer 1

Depreciation of currency happens eventually due to many external/internal factors. It's needed to control it as much as possible. Because that negatively impacts growth of the nation in these ways:

1. Fiscal deficit increases by a lot.
2. Foreign and investors show less inclination to do business.
3. Increase in prices due to imported goods like oil etc.

Government and RBI both have their respective roles to take counter measures in order to control and appreciate the currency.

Stronger currency value benefits the nation for sure, though some people say it doesn't impact much.

If the currency value remains stable or improves against Dollar,  it's definitely a success for both government and RBI.

Answer 2

Explanation:

What is Currency Depreciation?

Currency depreciation is a fall in the value of a currency in a floating exchange rate system. Currency depreciation can occur due to factors such as economic fundamentals, interest rate differentials, political instability or risk aversion among investors.

Countries with weak economic fundamentals such as chronic current account deficits and high rates of inflation generally have depreciating currencies. Currency depreciation, if orderly and gradual, improves a nation’s export competitiveness and may improve its trade deficit over time. But abrupt and sizeable currency depreciation may scare foreign investors who fear the currency may fall further, and lead to them pulling portfolio investments out of the country, putting