Depreciation

A currency depreciates when it buys fewer units of another currency than it did before, under a floating or managed regime where the rate is set by transactions rather than announced. There is no decision and no date. The rate simply prints lower over time, and the fall is read from the quotation rather than from a statement.

Which currency has depreciated depends on which side of the pair it sits, and this is where the reading most often goes wrong. A pair states how many units of the quote currency one unit of the base currency costs. A falling rate therefore means the base has depreciated against the quote, and a rising rate means the quote currency has depreciated against the base. The same movement is a depreciation and an appreciation at once, depending on which of the two is being described.

The word carries a second, unrelated meaning in accounting, where depreciation is the writing down of a fixed asset's value over its useful life. Nothing connects the two beyond the shared root, and company filings use the accounting sense exclusively.