Currency depreciation is most often used as the term describing the unofficial decrease in the exchange rate in a floating exchange rate system. Devaluation is a reduction in the value of a currency with respect to other monetary units. In common modern usage, it specifically implies an official lowering of the value of a country’s currency within a fixed exchange rate system, by which the monetary authority formally sets a new fixed rate with respect to a foreign reference currency. Depreciation and devaluation are sometimes used interchangeably, but they always refer to values in terms of other currencies. LO.1