Devaluation

Devaluation is the intentional reduction of the value of a country’s currency in relation to other currencies. This action is usually taken by a government or central bank to make a country’s exports cheaper and more competitive in the global market, while making imports more expensive. Devaluation can help improve a country’s trade balance, but it may also lead to higher inflation and reduced purchasing power for citizens. It is different from depreciation, which is a natural decline in currency value due to market forces.