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f a level 3 currency management and introduction this topic requires heavy background off concepts regarding currency weve learned at level 1 and level 2 so well have a quick look at what we have learned so far let us say we have a spot rate of rupees 50 for a dollar the currency that we see in the numerator this currency is called as the price currency and the currency that we see in the denominator this currency is called as the base currency now the best way to always look at the currency is to think of the denominator reserve of the currency as some commodity so let us say from rupees 50 if the currency becomes the new red becomes rupees 60 for a dollar then we would say that some commodity that you could have otherwise bought for a price of rupees 50 now you would buy that for a price of rupees 60 and therefore we will say that dollar has appreciated but from 50 if it becomes 40 for a dollar then now we will say dollar has depreciated so we always think from the perspective of