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Explain the effect of appreciation of domestic currency on imports.

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Appreciation of domestic currency means lower price of foreign currency in terms of domestic currency. This increases the price of domestic goods for foreign buyers. This means imports become cheaper. As a result the demand for imports may rise. 

Example: 1$ = 60 Rs is changed to 1$ = 55 Rs. It is appreciation of domestic currency & now importing 1 dollar good has become cheaper so import will increase.

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