The difference between depreciation and devaluation is as follows:
Depreciation |
Devaluation |
1. Depreciation of currency occurs when the value of currency reduces in terms of another currency due to the market forces of demand and supply in the global market. |
1. Devaluation of currency occurs when the government of a country reduces the value of its currency in terms of another currency by increasing the supply of domestic currency in the global market. |
2. Depreciation of currency happens under the floating exchange rate system. |
2. Devaluation of currency happens under the fixed exchange rate system. |