ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Devaluation is the deliberate downward adjustment of a country’s currency value. The government issuing the currency decides to devalue a currency. Devaluing a currency reduces the cost of a country’s exports and can help shrink trade deficits.

Detailed explanation-2: -Devaluation is reduction in value of domestic currency by the government under fixed exchange rate system.It is a deliberate effort. On the other hand, Depreciation is decrease in value of domestic currency due to market forces of demand and supply under flexible exchange rate system.

Detailed explanation-3: -A deliberate downward adjustment to the value of a country’s currency, relative to another currency, group of currencies or standard. Devaluation is a monetary policy tool of countries that have a fixed exchange rate or semi-fixed exchange rate.

Detailed explanation-4: -The correct answer is a Reduction in the value of a currency vis-a-vis major internationally traded currencies. Devaluation occurs when a country intentionally reduces the value of its currency relative to one or more foreign countries.

Detailed explanation-5: -A devaluation in the exchange rate lowers the value of the domestic currency in relation to all other countries, most significantly with its major trading partners. It can assist the domestic economy by making exports less expensive, enabling exporters to more easily compete in the foreign markets.