a. Appreciation or depreciation is calculated with respect to the base currency relative to the price currency.
b. Appreciation is the gain in the value of one currency relative to another currency,
c. Depreciation is the loss in value of one currency relative to another currency.
d. The percentage change in the ratio of exchange rates minus one. That is:
e. Suppose, the current exchange rate of a currency A/B is 50 and it increases to 50.50, then:
i. The percentage change is:
[(50.5000) / (50.0000)] – 1 = 0.01 or 1%
ii. This means that currency B, i.e. the base currency has appreciated 1% against currency A. It now takes fewer currencies B to buy currency A.
iii. It also means that currency A has depreciated by:
[(1/50.5000) / (1/50.0000)] – 1 = 0.0099001 or 0.99001%
Note that we have inverted the rate and treated currency A as the base currency.