Differentiate between devaluation and depreciation of currency.

Question

Difference between devaluation and depreciation is as follows:DevaluationDepreciationIt means the decrease in the price...

Accepted Answer

Difference between devaluation and depreciation is as follows:DevaluationDepreciationIt means the decrease in the price...

Devaluation	Depreciation
It means the decrease in the price of domestic currency under fixed exchange rates.	When the value of currency falls as compared to other currencies, it is known as depreciation.
It takes place due to official action (by government)	It takes place due to market forces.
It takes place under fixed (pegged) exchange rate system.	It takes place under flexible exchange exchange rate system. rate system.