So i came across these sentences when reading about the j curve:
In the goods market model, it is assumed that the exchange rate (E$/£) is directly related to current account demand in the United States. The logic of the relationship goes as follows. If the dollar depreciates, meaning E$/£ rises, then foreign goods will become more expensive to U.S. residents, causing a decrease in import demand.
I didn't understand this sentence : If the dollar depreciates, meaning E$/£ rises....
Doesn't E$/£ mean that the dollar is the base currency ? So for example , if i said that E$/£= 1.12£ then with one dollar you get 1.12 pounds? Doesn't this mean that if the dollar depreciates , then the exhcange rate should decrease?
So in case of depreciation of the dollar , the paragraph says that meaning E$/£ rises. But how is that possible ?
If the E$/£ is 1.12£ as of now , and say, it becomes E$/£=1.15£, before with one dollar before you could buy 1.12£, and now you can buy more , or else 1.15 pounds. This means that the dollar has appreciates in value.
What am i getting wrong?