Currency Appreciation

AAA

DEFINITION of 'Currency Appreciation '

An increase in the value of one currency in terms of another. Currencies appreciate against each other for various reasons, including capital inflows and the state of a country's current account. Typically a forex trader trades a currency pair in the hopes of currency appreciation of the base currency against the counter currency.

INVESTOPEDIA EXPLAINS 'Currency Appreciation '

Currency traders have to take into account appreciation when making a trade, since a long-term currency option contract might see its value decline if the value of the underlying currency adjusts. Additionally, as a currency appreciates it becomes more expensive to buy that country's exports. This can cause a contraction in the economy, which can further impact the value of the currency.

RELATED TERMS
  1. Exchange Rate

    The price of a nation’s currency in terms of another currency. ...
  2. Arbitrage

    The simultaneous purchase and sale of an asset in order to profit ...
  3. Currency Option

    A contract that grants the holder the right, but not the obligation, ...
  4. Cross Currency

    A pair of currencies traded in forex that does not include the ...
  5. Currency Pair

    The quotation and pricing structure of the currencies traded ...
  6. Forex Spread Betting

    A category of spread betting that involves taking a bet on the ...
Related Articles
  1. Currency Exchange: Floating Rate Vs. ...
    Forex Education

    Currency Exchange: Floating Rate Vs. ...

  2. The Currency Board: Understanding The ...
    Personal Finance

    The Currency Board: Understanding The ...

  3. Top 7 Questions About Currency Trading ...
    Forex Education

    Top 7 Questions About Currency Trading ...

  4. Understanding The Spread in Retail Currency ...
    Forex Education

    Understanding The Spread in Retail Currency ...

comments powered by Disqus
Hot Definitions
  1. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  2. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  3. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  4. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  5. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
  6. Earnings Before Interest After Taxes - EBIAT

    A financial measure that is an indicator of a company's operating performance. EBIAT, which is equivalent to after-tax EBIT ...
Trading Center