In the foreign exchange market, currency depreciation occurs when the value of one currency falls compared to the value of one or more other currencies. On the flipside, currency appreciation occurs when one currency gains in value compared to one or more other currencies.
What Is the Foreign Exchange Market?
The foreign exchange market (also referred to as forex and FX) is where currencies are traded, and as a whole, it is by far the biggest market in the world on a daily trading basis, exceeding the average daily trading turnover in the bond and stock markets. According to the Bank for International Settlements—a financial institution that is controlled by central banks worldwide and serves as their bank—daily turnover on foreign exchange markets exceeded $6 trillion in 2019, the latest year in which data was compiled.
Trading in the forex market affects the relative values of various currencies, and the relative values established by the forex market create the exchange rates at which travelers and other consumers can exchange currencies.
Foreign exchange is an integral part of global business, and reportedly, about 40 percent of the earnings of companies that make up the S&P 500 Index come from overseas. That means these companies have to repatriate money earned in euros, yen, pounds sterling, Swiss francs, Brazilian reais, Canadian dollars, Indian rupees, and other currencies back into U.S. dollars through these foreign exchange markets. When a currency appreciates or depreciates, it can have a large impact on a company’s bottom line.
Why Do Currencies Depreciate and Appreciate?
The value of a nation’s currency typically changes because of events or policies undertaken by that country. A single factor or a combination of factors may contribute to a currency’s change in valuation. A floating currency is more subject to depreciation or appreciation than one whose rate is fixed to the value of another currency. For example, the Canadian dollar is a floating currency, so the market dictates its value. The value of the Hong Kong dollar, on the other hand, is pegged at a fixed exchange rate to the U.S. dollar.
An increase in a country’s interest rates tends to make its currency more valuable. A higher interest rate may lead to higher rates on sovereign debt, making it more attractive to domestic and international investors. A country lowering interest rates, on the other hand, might make its assets less attractive.
Another prime factor that influences a currency’s direction is a nation’s trade balance. A deficit in the current account, which represents the broadest measure of trade in goods and services, could mean that there’s less demand for the local currency because there are more goods imported than exported. A current account surplus, on the other hand, indicates that a country sells more goods abroad than it imports, and that translates into more demand for the local currency.
Investors may sometimes turn to speculation and target a country’s currency for a profit. For example, in 1992, George Soros made a profit exceeding a billion dollars when he bet against the British pound, which dropped significantly against the dollar because it was viewed as overvalued at the time.
A change in a nation’s political future may prompt investors to trade for or against that country’s currency. Uncertainty over leadership may cause the currency to depreciate, while optimism for the nation’s future may lead to appreciation.
Worldwide or international events may cause currencies across countries to depreciate or appreciate. For example, at the start of the COVID-19 pandemic in 2020, nations closed their borders, which resulted in global trade coming to a virtual halt, tourism declining, and people not spending. As a consequence, currencies depreciated.
How to Calculate Depreciation and Appreciation
A change in the value of one currency against another is typically expressed as a percentage. When calculating the change in the value of one currency (using another as its benchmark), it’s important to note which is the base currency and which is the price currency.
Calculating Depreciation or Appreciation Using Base Currency
([New Price Currency / Base Currency ] / [Old Price Currency / Base Currency]) — 1 = Depreciation (Negative Percent Change) or Appreciation (Positive Percent Change)
For example, let’s say a U.S. dollar fetches 20 Mexican pesos during trading on a Monday. In this case, the base currency is the U.S. dollar, while the price currency is the Mexican peso. Monday’s exchange rate can be expressed as 20 Mexican pesos per U.S. dollar. The following day, Tuesday, the dollar is quoted at 22 Mexican pesos.
In this equation, the price currency is the numerator, and the base currency, which is represented as 1, is the denominator.
That translates to a 9.1 percent depreciation in the Mexican peso compared to the U.S. dollar.
Calculating Depreciation or Appreciation Using Price Currency
([Base Currency / New Price Currency] / [Base Currency / Old Price Currency]) — 1 = (Old Price Currency / New Price Currency) — 1 = Depreciation (Negative Percent Change) or Appreciation (Positive Percent Change)
To measure the dollar’s change to the peso, this formula for the base currency would be used—it is the inverse of the previous formula. Filling in the Mexican peso as the base currency and U.S. dollar as the price currency, ([1 / 20] / [1 / 22]) — 1 = (22 / 20) — 1 = 1.1 — 1 = 0.1 = 10 percent.
Looked at from this angle, the U.S. dollar appreciated in value by 10 percent compared to the Mexican peso.
Notice that these two results are different. One currency, the Mexican peso, weakened against another currency, the U.S. dollar. But it can also be looked at from the other side—the U.S. dollar strengthened against the Mexican peso.
Note: Technically, a currency’s depreciation cannot exceed 100 percent. Rather than express it in mathematical terms, it is better to phrase it from its original level to its current level. For example, it makes more sense to say that the Mexican peso depreciated to 46 per U.S. dollar from 21 instead of saying it declined by 125 percent.
What Happens When a Nation's Currency Depreciates?
When a country’s currency depreciates, its central bank can intervene in an attempt to prevent the currency from depreciating further. Their main tool in stemming a decline is the use of international reserves, which are typically in U.S. dollars.
Central banks, especially in developing nations with trade surpluses, tend to save dollars as a way to help strengthen their balance sheets because the U.S. dollar is viewed as stable and has been serving as the world’s currency of choice for the past few decades.
If a currency comes under attack from speculation, a country’s central bank could buy back its national currency by selling U.S. dollars in the foreign exchange market. Sometimes, a central bank can use up almost all of its international reserves with disastrous results that leave it with few resources to defend its currency, leaving the country vulnerable to a freefall of depreciation. For countries that have high debt relative to gross domestic product, this can mean risking a pick-up in inflation and defaulting on debt.
How Do Depreciation and Appreciation Affect a Nation’s Economy?
A stronger currency can have upsides as well as downsides for a country. In the U.S., for example, international investors are attracted to American assets, such as real estate, and U.S. government securities due to the strength of the U.S. dollar. At the same time, though, an appreciating currency could make asset prices higher, raising the specter of an acceleration in inflation.
Real-World Examples of Currency Depreciation
In 1990, the U.K. joined the EU's Exchange Rate Mechanism (ERM), which allowed its currency to be fixed against other European currencies but allowed to trade within a range. In 1992, the British pound was viewed as overvalued and was coming under attack from speculators. The pound sterling decoupled from the ERM and traded freely, but its value depreciated, allowing speculators like George Soros to pocket huge profits. The U.K.’s response to prevent the pound’s sudden depreciation was a steep increase in interest rates and buying its currency in the foreign exchange market.
In the lead-up to the 1997–98 East Asian currency crisis, nations such as Thailand, Indonesia, the Philippines, Malaysia, and South Korea were building up years of deficits in their current accounts. Yet, their currencies remained relatively stable, and their exchange rates traded against the dollar in a narrow range for many years.
The Thai baht was the first currency to come under attack, and the central bank tried to defend the baht by selling dollars from its international reserves until almost all of its reserves were gone and the baht traded to float freely. The baht lost half its value, and depreciation in currencies of other East Asian nations followed. Economies went into recession, marked by high unemployment rates and accelerating inflation. Businesses collapsed as their dollar-based loans became difficult to repay.
Currencies of many countries affected in this contagion have yet to return to their pre-1997 crisis levels, and it took years for some countries to bring back their international reserves to earlier levels. One benefit from their depreciating currencies was that purchasing goods produced in their countries became cheaper, pushing their current accounts into surpluses.
In 2022, after years of mismanagement of the country’s finances, a persistent current account deficit, and an unpopular government, Sri Lanka’s rupee depreciated to record levels. In its economic collapse, prices for consumer goods such as gasoline and food skyrocketed.
An enduring mystery for three years is how Donald Trump came to be the president who shut down American society for what turned out to be a manageable respiratory virus, setting off an unspeakable crisis with waves of destructive fallout that continue to this day.
Let’s review the timeline and offer some well-founded speculations about what happened.
On March 9, 2020, Trump was still of the opinion that the virus could be handled by normal means.
So last year 37,000 Americans died from the common Flu. It averages between 27,000 and 70,000 per year. Nothing is shut down, life & the economy go on. At this moment there are 546 confirmed cases of CoronaVirus, with 22 deaths. Think about that!
What changed? Deborah Birx reports in her book that Trump had a friend die in a New York hospital and this is what shifted his opinion. Jared Kushner reports that he simply listened to reason. Mike Pence says he was persuaded that his staff would respect him more. No question (and based on all existing reports) that he found himself surrounded by “trusted advisors” amounting to about 5 or so people (including Mike Pence and Pfizer board member Scott Gottlieb)
It was only a week later when Trump issued the edict to close all “indoor and outdoor venues where people congregate,” initiating the biggest regime change in US history that flew in the face of all rights and liberties Americans had previously taken for granted. It was the ultimate in political triangulation: as John F. Kennedy cut taxes, Nixon opened China, and Clinton reformed welfare, Trump shut down the economy he promised to revive. This action confounded critics on all sides.
A month later, Trump said his decision to have “turned off” the economy saved millions of lives, later even claiming to have saved billions. He has yet to admit error.
....My Administration and I built the greatest economy in history, of any country, turned it off, saved millions of lives, and now am building an even greater economy than it was before. Jobs are flowing, NASDAQ is already at a record high, the rest to follow. Sit back & watch!
Even as late as June 23rd of that year, Trump was demanding credit for having followed all of Fauci’s recommendations. Why do they love him and hate me, he wanted to know.
We did a great job on CoronaVirus, including the very early ban on China, Ventilator production, and Testing, which is by far the most, and best, in the World. We saved millions of U.S. lives.! Yet the Fake News refuses to acknowledge this in a positive way. But they do give....
Something about this story has never really added up. How could one person have been so persuaded by a handful of others such as Fauci, Birx, Pence, and Kushner and his friends? He surely had other sources of information – some other scenario or intelligence – that fed into his disastrous decision.
In one version of events, his advisors simply pointed to the supposed success of Xi Jinping in enacting lockdowns in Wuhan, which the World Health Organization claimed had stopped infections and brought the virus under control. Perhaps his advisors flattered Trump with the observation that he is at least as great as the president of China so he should be bold and enact the same policies here.
One problem with this scenario is timing. The Oval Office meetings that preceded his March 16, 2020, edict took place the weekend of the 14th and 15th, Friday and Saturday. It was already clear by the 11th that Trump was ready for lockdowns. This was the same day as Fauci’s deliberately misleading testimony to the House Oversight Committee in which he rattled the room with predictions of Hollywood-style carnage.
On the 12th, Trump shut all travel from Europe, the UK, and Australia, causing huge human pile-ups at international airports. On the 13th, the Department of Health and Human Services issued a classified document that transferred control of pandemic policy from the CDC to the National Security Council and eventually the Department of Homeland Security. By the time that Trump met with Fauci and Birx in that legendary weekend, the country was already under quasi-martial law.
Isolating the date in the trajectory here, it is apparent that whatever happened to change Trump occurred on March 10, 2020, the day after his Tweet saying there should be no shutdowns and one day before Fauci’s testimony.
That something very likely revolves around the most substantial discovery we’ve made in three years of investigations. It was Debbie Lerman who first cracked the code: Covid policy was forged not by the public-health bureaucracies but by the national-security sector of the administrative state. She has further explained that this occurred because of two critical features of the response: 1) the belief that this virus came from a lab leak, and 2) the vaccine was the biosecurity countermeasure pushed by the same people as the fix.
Knowing this, we gain greater insight into 1) why Trump changed his mind, 2) why he has never explained this momentous decision and otherwise completely avoids the topic, and 3) why it has been so unbearably difficult to find out any information about these mysterious few days other than the pablum served up in books designed to earn royalties for authors like Birx, Pence, and Kushner.
Based on a number of second-hand reports, all available clues we have assembled, and the context of the times, the following scenario seems most likely. On March 10, and in response to Trump’s dismissive tweet the day before, some trusted sources within and around the National Security Council (Matthew Pottinger and Michael Callahan, for example), and probably involving some from military command and others, came to Trump to let him know a highly classified secret.
Imagine a scene from Get Smart with the Cone of Silence, for example. These are the events in the life of statecraft that infuse powerful people with a sense of their personal awesomeness. The fate of all of society rests on their shoulders and the decisions they make at this point. Of course they are sworn to intense secrecy following the great reveal.
The revelation was that the virus was not a textbook virus but something far more threatening and terrible. It came from a research lab in Wuhan. It might in fact be a bioweapon. This is why Xi had to do extreme things to protect his people. The US should do the same, they said, and there is a fix available too and it is being carefully guarded by the military.
It seems that the virus had already been mapped in order to make a vaccine to protect the population. Thanks to 20 years of research on mRNA platforms, they told him, this vaccine can be rolled out in months, not years. That means that Trump can lock down and distribute vaccines to save everyone from the China virus, all in time for the election. Doing this would not only assure his reelection but guarantee that he would go down in history as one of the greatest US presidents of all time.
This meeting might only have lasted an hour or two – and might have included a parade of people with the highest-level security clearances – but it was enough to convince Trump. After all, he had battled China for two previous years, imposing tariffs and making all sorts of threats. It was easy to believe at that point that China might have initiated biological warfare as retaliation. That’s why he made the decision to use all the power of the presidency to push a lockdown under emergency rule.
To be sure, the Constitution does not allow him to override the discretion of the states but with the weight of the office complete with enough funding and persuasion, he could make it happen. And thus did he make the fateful decision that not only wrecked his presidency but the country too, imposing harms that will last a generation.
It only took a few weeks for Trump to become suspicious about what happened. For weeks and months, he toggled between believing that he was tricked and believing that he did the right thing. He had already approved another 30 days of lockdowns and even inveighed against Georgia and later Florida for opening. He went so far as to claim that no state could open without his approval.
For the purpose of creating conflict and confusion, some in the Fake News Media are saying that it is the Governors decision to open up the states, not that of the President of the United States & the Federal Government. Let it be fully understood that this is incorrect....
There is another fascinating feature to this entirely plausible scenario. Even as Trump’s advisors were telling him that this could be a bioweapon leaked from the lab in China, we had Anthony Fauci and his cronies going to great lengths to deny it was a lab leak (even if they believed that it was). This created an interesting situation. The NIH and those surrounding Fauci were publicly insisting that the virus was of zoonotic origin, even as Trump’s circle was telling the president that it should be regarded as a bioweapon.
Fauci belonged to both camps, which suggests that Trump very likely knew of Fauci’s deception all along: the “noble lie” to protect the public from knowing the truth. Trump had to be fine with that.
Gradually following the lockdown edicts and the takeover by the Department of Homeland Security, in cooperation with a very hostile CDC, Trump lost power and influence over his own government, which is why his later Tweets urging a reopening fell on deaf ears. To top it off, the vaccine failed to arrive in time for the election. This is because Fauci himself delayed the rollout until after the election, claiming that the trials were not racially diverse enough. Thus Trump’s gambit completely failed, despite all the promises of those around him that it was a guaranteed way to win reelection.
To be sure, this scenario cannot be proven because the entire event – certainly the most dramatic political move in at least a generation and one with unspeakable costs for the country – remains cloaked in secrecy. Not even Senator Rand Paul can get the information he needs because it remains classified. If anyone thinks the Biden approval of releasing documents will show what we need, that person is naive. Still, the above scenario fits all available facts and it is confirmed by second-hand reports from inside the White House.
It’s enough for a great movie or a play of Shakespearean levels of tragedy. And to this day, none of the main players are speaking openly about it.
Jeffrey A. Tucker is Founder and President of the Brownstone Institute. He is also Senior Economics Columnist for Epoch Times, author of 10 books, including Liberty or Lockdown, and thousands of articles in the scholarly and popular press. He speaks widely on topics of economics, technology, social philosophy, and culture.
Why children are less likely to become severely ill with COVID compared with adults is not clear. Some have suggested that it might be because children are less likely to have diseases, such as type 2 diabetes and high blood pressure, that are known to be linked to more severe COVID. Others have suggested that it could be because of a difference in ACE2 receptors in children – ACE2 receptors being the route through which the virus enters our cells.
Some scientists have also suggested that children may have a higher level of existing immunity to COVID compared with adults. In particular, this immunity is thought to come from memory T cells (immune cells that help your body remember invading germs and destroy them) generated by common colds – some of which are caused by coronaviruses.
We put this theory to the test in a recent study. We found that T cells previously activated by a coronavirus that causes the common cold recognise SARS-CoV-2 (the virus that causes COVID) in children. And these responses declined with age.
Early in the pandemic, scientists observed the presence of memory T cells able to recognise SARS-CoV-2 in people who had never been exposed to the virus. Such cells are often called cross-reactive T cells, as they stem from past infections due to pathogens other than SARS-CoV-2. Research has suggested these cells may provide some protection against COVID, and even enhance responses to COVID vaccines.
What we did
We used blood samples from children, sampled at age two and then again at age six, before the pandemic. We also included adults, none of whom had previously been infected with SARS-CoV-2.
In these blood samples, we looked for T cells specific to one of the coronaviruses that causes the common cold (called OC43) and for T cells that reacted against SARS-CoV-2.
We used an advanced technique called high-dimensional flow cytometry, which enabled us to identify T cells and characterise their state in significant detail. In particular, we looked at T cells’ reactivity against OC43 and SARS-CoV-2.
We found SARS-CoV-2 cross-reactive T cells were closely linked to the frequency of OC43-specific memory T cells, which was higher in children than in adults. The cross-reactive T cell response was evident in two-year-olds, strongest at age six, and then subsequently became weaker with advancing age.
We don’t know for sure if the presence of these T cells translates to protection against COVID, or how much. But this existing immunity, which appears to be especially potent in early life, could go some way to explaining why children tend to fare better than adults with a COVID infection.
Our study is based on samples from adults (26-83 years old) and children at age two and six. We didn’t analyse samples from children of other ages, which will be important to further understand age differences, especially considering that the mortality rate from COVID in children is lowest from ages five to nine, and higher in younger children. We also didn’t have samples from teenagers or adults younger than 26.
In addition, our study investigated T cells circulating in the blood. But immune cells are also found in other parts of the body. It remains to be determined whether the age differences we observed in our study would be similar in samples from the lower respiratory tract or tonsil tissue, for example, in which T cells reactive against SARS-CoV-2 have also been detected in adults who haven’t been exposed to the virus.
Nonetheless, this study provides new insights into T cells in the context of COVID in children and adults. Advancing our understanding of memory T cell development and maturation could help guide future vaccines and therapies.
Marion Humbert received funding from KI Foundation for Virus Research (Karolinsk Institutet, Sweden) and Läkare mot AIDS (Sweden).
Annika Karlsson receives funding from the Swedish Research Council (Dnr 2020-02033), CIMED project grant, senior (Dnr: 20190495), and Karolinska Institutet (Dnr: 2019-00931 and 2020-01599).
HAMILTON, ON – Mar 24, 2024– Tobacco users in Canada are exposed to higher levels of cyanide than smokers in lower-income nations, according to a large-scale population health study from McMaster University.
Credit: McMaster University
HAMILTON, ON – Mar 24, 2024– Tobacco users in Canada are exposed to higher levels of cyanide than smokers in lower-income nations, according to a large-scale population health study from McMaster University.
Scientists made the discovery while investigating the molecule thiocyanate – a detoxified metabolite excreted by the body after cyanide inhalation. It was measured as a urinary biomarker of tobacco use in a study of self-reported smokers and non-smokers from 14 countries of varying socioeconomic status.
“We expected the urinary thiocyanate levels would be similar across regions and reflect primarily smoking intensity. However, we noticed significant elevation of thiocyanate in smokers from high-income countries even after adjusting for differences in the number of cigarettes smoked per day,” says Philip Britz-McKibbin, co-author of the study and a professor of chemistry and chemical biology at McMaster.
Tobacco-related illness remains the leading cause of preventable illness and premature death in Canada, contributing to approximately 48,000 deaths annually. According to researchers, the findings could be caused by the type of cigarettes smoked in high-income countries like Canada.
“The cigarettes commonly consumed in Canada are highly engineered products with lower tar and nicotine content to imply they’re less harmful. Heavy smokers with nicotine dependence compensate by smoking more aggressively with more frequent and deeper inhalations that may elicit more harm, such as greater exposure to the respiratory and cardiotoxin, cyanide.”
Smoking rates in Canada have declined from 26 per cent in 2001 to 13 per cent in 2020. But participation in smoking cessation programs has declined during the COVID-19 pandemic, leading to concern about a potential uptick in smoking rates, including cannabis use and a plethora of vaping of products popular among young adults.
Researchers say urinary thiocyanate can serve as a robust biomarker of the harms of tobacco smoke that will aid future research on the global tobacco picture, since most smokers now reside in developing countries. As smoking rates have decreased here in Canada, at-risk groups like youth and pregnant women have been prone to underreport their tobacco use when surveyed, making a reliable biomarker more valuable.
“Historically assessing tobacco behaviors have relied on questionnaires that are prone to bias, especially when comparing different countries and local cultures. The idea is to find robust methods that can quantify recent tobacco smoke exposure more reliably and objectively, which may better predict disease risk and prioritize interventions for smoking cessation.” says Britz-Mckibbin.
The study was published in the latest issue of Nicotine and Tobacco Research and received funding from the Natural Sciences and Engineering Research Council of Canada, Genome Canada, the Canada Foundation for Innovation,Hamilton Health Sciences New Investigator Fund, and an internal grant from the Population Health Research Institute.
For more information please contact:
Photos of Philip Britz-McKibbin can be found here
Credit: McMaster University
Nicotine & Tobacco Research
Method of Research
Subject of Research
Validation of Urinary Thiocyanate as a Robust Biomarker of Active Tobacco Smoking in the Prospective Urban and Rural Epidemiological Study