Effect of depreciation of exchange rate

Makes exports cheaper - for example euro depreciates, exports from Europe sell for a lower price in America as it takes more dollars to buy each euro. People in America have to spend more dollars buying Euro's to buy the same amount of exports from Europe. Imports are now more expensive and do the opposite - for example imports into Europe now cost more to buy from America as more Euro's have to be given to buy the dollars needed for the same amount of imports.