appreciation
Suppose last year your one euro bought you 1 US dollar, and this year that same euro buys 1.20 dollars. Your euro has grown more powerful abroad — it commands more foreign money than before, even though you have done nothing. That gain in a currency's market value against another currency is called appreciation. The currency has 'strengthened'; it now buys more.
Appreciation happens under a floating exchange rate when more people want to buy a currency than to sell it — when demand for it rises relative to supply. That demand can come from foreigners wanting to invest in the country, buy its exports, or earn its higher interest rates, all of which require obtaining its currency first. Concretely, if the euro climbs from 1.00 to 1.20 dollars, a European travelling to America finds everything 20 percent cheaper, while an American buying European goods finds them 20 percent dearer. Crucially, appreciation is a market outcome under a floating regime; the deliberate, official version of the same move under a fixed regime is called revaluation, a different word for a different mechanism.
A stronger currency is a mixed blessing, and that is the key honest point. It makes imports and foreign travel cheaper and can help tame inflation, which pleases consumers. But it makes a country's exports more expensive abroad, squeezing exporters and the workers they employ, and it can attract destabilising hot money. So when a headline cheers a 'strong' currency as good news, ask: good for whom? A persistently strong currency that hollows out a country's exporters is not unambiguously a blessing.
When the Japanese yen appreciated sharply in the 1980s, Japanese tourists suddenly flooded into Europe and America because their stronger yen bought far more abroad — but Japanese exporters of cars and electronics found their goods harder to sell as foreign buyers faced higher prices.
Appreciation helps importers and travellers but hurts a country's exporters.
Appreciation (a market rise) and revaluation (an official upward reset of a fixed rate) describe the same direction by different mechanisms — do not use them interchangeably.