Distinguish between devaluation and depreciation of domestic currency

cbse-class-12

#1

Distinguish between devaluation and depreciation of domestic currency.
or
How depreciation is different from devaluation?


#2

Devaluation is fall in the value of domestic currency in relation to foreign currency as planned by the Central Bank in a situation, when exchange rate is not determined by market forces of demand and supply. Depreciation of domestic currency occurs when the value of domestic currency decreases in relation to the value of other currencies under flexible exchange rate system, as determined by the market forces of demand and supply, e.g. if US $ exchanges for Rs 60 instead of Rs 55 earlier, the domestic currency (Indian rupee).has shown depreciation.