Question

What does it mean to say that a currency appreciates? Depreciates? Becomes stronger? Becomes weaker?

Short answer

The appreciation of currency means the currency is getting stronger within the interchange market.

Step-by-step solution

Concept Introduction  

Foreign Exchange Market- Most countries have their own currency and market values. But not all the countries have their own currency, they need dollarized their currency. The countries which have different currency, needs a typical currency to participate in an exceedingly global economic market. Hence, the market where all the countries are exchanging or trading their currency is understood as interchange market.

Explanation of Solution  

The appreciation of currency means the currency is getting stronger within the interchange market. as an example, if Canadian business became more competitive then there would be a rise within the demand for Canadian goods. this may further increase the demand for Canadian goods which might lead to an appreciation (stronger) in its currency. However, if there's uncertainty within the market within the future then they'd start selling Canadian dollars within the marking. As a result, supply would increase, and this may cause depreciation (weaker) of currency or fall in its value.