Calculation of appreciation / depreciation of currency
It never struck me that the students can get confused over this issue - but a query raised by one of our students made me realise this .. The issue raised is:

Situation 1:
Quote given : Re/$ = 40 (i.e 1$ = Rs.40)
$ appreciates by 10% - so what should the new quote be.

View 1: The new quote is 1$=44
View 2: The new quote is 1$ = 44.44
Solution: You have to read the situation like this -"THE SAME DOLLAR WILL NOW FETCH MORE RUPEES"
Correct view : 1$=44

Situation 2:
Quote given Re/$ = 40 (i.e 1$=Rs.40)
Re depreciates by 10%
You have to read the situation like this - "THE SAME RUPEES WILL NOW FETCH LESSER DOLLARS"
So the solution is:
Rs.40 = 1$
or Rs.40 = 0.90$
or 1$ = [40/0.90] = 44.44


A currency is said to have appreciated if one is able to purchase more of the other currency against it after appreciation. Thus $1=Rs.50 changes to $1=55 then one is able to get more rupees for the same dollar - hence we say $ has appreciated by 10%. This also indicates that the rupee has depreciated but the percentage would change. When you quote it with reference to rupees because then your initial quote would be 1Re = 0.02$ and the new quote would be Re1=0.01818 (based on1$=Rs.55) which would indicate rupee has depreciated by 9.1%

I hope the above clears some fog over the issue...
cheers and happy studying