Losing the purchasing power of a currency is known as its loss of value in terms of real products (goods and services). When a currency loses its value, it has impacts on economy as a whole, and both local and foreign markets.

Generally, the value loss of a currency will lead to an inflationary state of a nation locally, while this creates more demand for local products in the foreign market. This may cause for booming the export market, while price of the product become high in the local market.

By the way, if the local producers fail to meet the booming export demad of local product, this may cause an economic set-back and may affect the foreign market too. Therefore, it is advised that an economy should have the loss of economic value of a currency in a smoothest way (without having a sudden increase or decrease) that will enable an economy to achieve it macro-economic goals (price stability, employment, positive impact of the balance of payment, etc.). Keynes has suggested that acceptable rate of inflation (loss of currency value) in an economy is about 3% annually. According to Keynes, the economy may suffer for stabilizing its economic operations, if the inflation is heavily deviate from this 3% of inflation.