disinflation vs deflation: which is better for a currency?
Deflation explained
Deflation is the absence of inflation meaning the country's inflation rate has dropped below 0%. When there is deflation, most consumers stop spending money because they expect the prices of goods to drop further. Imagine you buy something for $10 today and tomorrow it is selling for $5; you would have lost $5.
When deflation causes consumers to stop spending money, producing companies begin to record lower sales, workers get laid off etc. This reduces the GDP of the country's economy thus making it an unattractive destination for foreign investors and ultimately weakening its currency.
Disinflation explained
Disinflation is when inflation is present but the rate at which it is increasing is small and not a threat. Remember a low inflation is good for an economy and the ideal inflation rate is 2%.
Disinflation may not really harm a currency as long as the inflation is still within the acceptable range of 2%. So, disinflation is better for a currency when compared to deflation.