Countries, majorly the developing ones, frequently experience currency depreciation. Various factors are related to the currency depreciation including interest rates, trade, foreign reserves, etc. It is important for countries to keep a stabilized value of the currency in international markets in order to allow the economy to grow sustainably. Economists are greatly concerned about the value of the currency as it is the root cause of many economic problems including inflation, unemployment, poverty, etc. currency depreciation is a real-world problem and appropriate measures are necessary.
- To stabilize the currency, the country should try to export more goods and services. The trade deficit is the root cause of debt for countries where developing countries seek to borrow funds from international organizations like International Monetary funds.
- Foreign reserves are very important for the economy. it is crucial for a country to raise foreign reserve to have effective participation in international markets.
- Avoiding debt is another way to avoid currency depreciation in order to save foreign reserves for other purposes than catering foreign payments.
- Effective policy-making is crucial in this regard. The world needs outstanding policymakers in this modern world because countries all around the world are suffering from different economic problems.