Appreciation means an asset is worth more than before. A share that climbs from 100 birr to 120 birr has appreciated by 20 percent on paper. Currencies can also appreciate against each other when one buys more of the other than it did previously.
Key takeaways
- Unrealised appreciation is only a paper gain until you sell.
- Inflation can make nominal appreciation look stronger than real purchasing power gains.
- Currency appreciation helps importers and hurts exporters, all else equal.
- Past appreciation never guarantees future rises.