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Depreciation is the loss of value of an asset or currency.

In business and economic terms, depreciation is a decrease in value due to wear and tear, use, or the passage of time.

For example, a company’s computer loses value when new, faster models come onto the market, making the ones the company bought obsolete. Meanwhile, the value of a car depreciates with the passage of time and use.

In monetary terms, depreciating the value of a currency can be used as a tool to gain competitiveness and increase exports. Depreciating a currency means that its value will be lower against other currencies and, therefore, its products will be more competitive abroad, but acquiring foreign goods will be more expensive.