Exchange Rate Appreciation
Currency appreciation occurs when a currency's value increases relative to other currencies. The pound appreciates against the euro if the pound buys more euros (e.g., £1 buys €1.20 instead of €1.10).
Real World
In 2022–23, the pound appreciated against the Turkish lira as Turkey suffered high inflation and capital outflows, meaning UK tourists found Turkey exceptionally cheap while Turkish importers of British goods faced higher costs.
Exam Focus
Distinguish appreciation from revaluation — appreciation applies only to floating exchange rate systems; conflating them loses marks.
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