Currency appreciation is the increase in the value of one currency relative to another. For example, if the EUR-USD exchange rate moves from 1.00 to 1.15, it means that the euro has appreciated by 15% against the U.S. dollar. Home currency appreciation squeezes the profits of exporters as their sales are less valuable when converted in the home currency. Faced with an appreciating currency, exporters in such situations might attempt to raise selling prices abroad to boost their margins, but they would likely see a fall in export sales. Currency appreciation also means that local firms will face greater competitive pressure in their home markets from foreign companies selling. The more differentiated a company’s products are, the less competition it will face and the greater its ability to maintain its domestic currency prices both at home and abroad in the face of a local currency appreciation. Similarly, if most competitors are based in the home country, then all can raise their foreign currency prices without putting any of them at a competitive disadvantage relative to their domestic competitors.