Explain how currency value is measured against another cureency like 1$ =64 rs .. how demand nd supply affecting this .. in details pls .
Dear Student
1$=Rs. 64 here explains the exchange rate of rupees and dollar . This signifies that for each dollar we need to pay 64 rupees . Suppose a good manufactured in America costs 1$ . That good is exported to India by America . So when an Indian tries to buy that American good he has to par 64 rupees .
Now if this exchange value changes from 1$=Rs.64 to 1$=Rs. 68 . This means that there has been an depreciation of Indian currency . Dollar has become costlier with respect to rupees . So now the same good that was worth 1$ a person needs to pay 68 rupees instead of 64 rupees . So imports into India become costlier and exports to America become cheaper . So demand for foreign goods in India falls and supply of domestic goods in foreign market rises .
Just the opposite case happens in case of appreciation of currency or when Indian currency becomes costlier with respect to dollar .
Regards .
1$=Rs. 64 here explains the exchange rate of rupees and dollar . This signifies that for each dollar we need to pay 64 rupees . Suppose a good manufactured in America costs 1$ . That good is exported to India by America . So when an Indian tries to buy that American good he has to par 64 rupees .
Now if this exchange value changes from 1$=Rs.64 to 1$=Rs. 68 . This means that there has been an depreciation of Indian currency . Dollar has become costlier with respect to rupees . So now the same good that was worth 1$ a person needs to pay 68 rupees instead of 64 rupees . So imports into India become costlier and exports to America become cheaper . So demand for foreign goods in India falls and supply of domestic goods in foreign market rises .
Just the opposite case happens in case of appreciation of currency or when Indian currency becomes costlier with respect to dollar .
Regards .