What is the term when money loses its value?

Answer 1

The value of money declines because of some reasons which are following.

Firstly when there is political instability in the country and unstabilized economy then investors withdraw their money according to them which look unsecured in the country and then the currency of that country will lose its value.

Secondly when the country imports more than its exports then the BOP(balance of payment) will be in deficit and then the currency of that country will lose its value.

Thirdly when there is influence in the country then the currency of that country will lose its value. suppose the Government get loans from IMF(International monetary fund )is the name of Organization then the Government have to pay it back to IMF with interest in the specific period of time then the price of commodities will go up, high taxes and unemployment will rise, like recently in America unemployment rose to 10% but couple of months ago the unemployment ratio was 7.4% and it may more rise in the future.

Why the value of the U.S. Dollar has dropped against other major currencies?

Since this summer, the value of the U.S. Dollar has dropped about 9 percent against other major currencies. it hit a new low against the euro, and its value has dropped more than 40percent against the European currency since 2002. One dollar is now worth only about three-quarters of a single euro.

Economists say the decrease is due in part to two big deficits in the U.S. First, there's the U.S. budget deficit, the amount the federal government had to borrow to cover its spending: $413billion for the past fiscal year.

The fiscal year or financial year is the accounting period for the federal government which begins on October 1and ends on September 30.

Answer 2

Currency depreciation is a decrease in the value of money in a floating exchange rate. This is due to market forces and not by an official decision of a government.