Appreciation
When a currency or asset gains value, so each unit buys more than it did before.
Appreciation means getting stronger. If the euro appreciates against the dollar, one euro buys more dollars than yesterday, and EUR/USD climbs.
In a floating market it happens because more people want the currency: higher interest rates, a strong economy or a rush to safety can all pull money in. The opposite is depreciation. Do not confuse it with a revaluation, which is a deliberate official change to a fixed rate.
Seeing appreciation in a quote
- On Monday, EUR/USD is 1.0800: one euro buys 1.08 dollars.
- By Friday it is 1.0950.
- One euro now buys 1.095 dollars, about 1.4% more.
Bottom line: The euro appreciated against the dollar, and the dollar depreciated against the euro.
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