What Factors Can Cause Currency Depreciation?

[Suba]

Currency depreciation, or inflation, is a condition in which a country's currency depreciates, reducing people's purchasing power and increasing commodity prices. Currency depreciation can range from mild to severe.

Several factors can cause a country's currency to depreciate, including:
1. Economic instability
2. Too much money in circulation
3. The country has too much debt
4. Increased imports are not offset by a decrease in exports.

 

[Min George]

When a country imports more than it exports,, it's balance of payments would be negative and the currency would depreciate.

 

[neku]

Large current account deficit can cause currency depreciation. Due to high tariffs, the exports to United States have decreased and the currency value is decreasing.