Appreciation

Currencies have no value except against each other, so appreciation is always pairwise and always relative. Because a rate states how many units of the second currency one unit of the first costs, a rising quotation means the first has appreciated and the second has weakened by the same event. A currency can appreciate against one counterpart and weaken against another in the same session, which is why trade weighted indices exist: they average a currency's movement against a basket rather than against a single counterpart.

The channels economists name are conventional and their relative weight is contested. Interest rate differentials attract capital toward the higher yielding currency. Trade and investment flows create demand for the currency in which goods or assets are priced. For an exporter of raw materials, the terms of trade move the currency with the commodities it sells. Expectations of all three move the rate before the events themselves occur, which is why a rate frequently moves on a data release rather than on the condition the data describes.

Two distinctions are worth holding. Appreciation is a market outcome, while a revaluation is an administrative act by an authority holding a fixed rate, and the same word is often used loosely for both. And the arithmetic is asymmetric: a currency appreciating by a given percentage against another does not correspond to that other falling by the same percentage, because the two rates are reciprocals of one another.