Appreciation refers to an increase in the value of a country's currency relative to other currencies. This means that one unit of the currency can buy more units of another currency.
Imagine your favorite video game character leveling up and becoming stronger. When a country's currency appreciates, it becomes more powerful compared to other currencies, allowing it to buy more goods and services from other countries.
Trade Surplus: When a country exports more than it imports, which can lead to appreciation.
Balance of Payments: A record of all economic transactions between residents of one country and residents of foreign countries.
Capital Inflows: The movement of money into a country from foreign investors, which can cause appreciation.
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