CA Foundation P4 · Chapter 9 · Question 11 of 15
The exchange rate changes from Rs. 75 per US dollar to Rs. 80 per US dollar. Measuring the change in the dollar value of one rupee, the percentage depreciation of the rupee is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) 6.25%
Explanation
The depreciation of the rupee is measured by the change in what one rupee is worth in dollars: before = $1/75, after = $1/80. Percentage change = (1/80 - 1/75)/(1/75) x 100 = (75/80 - 1) x 100 = -6.25%, so the rupee depreciated by 6.25%. The figure (80 - 75)/75 x 100 = 6.67% is the appreciation of the dollar against the rupee, not the depreciation of the rupee.
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