Demand for any countrys currency on the foreign exchange market is determined by demand for that countrys exports of goods and services and by changes in. Devaluation is the deliberate downward adjustment to the value of a countrys currency relative to another currency, group of currencies, or standard. These are the possible impacts of currency depreciation on consumption. In modern monetary policy, a devaluation is an official lowering of the value of a countrys. Devaluation is most often used in a situation where a currency has a defined value relative to the baseline. In a case where a country revalue its currency higher the opposite of devaluation. Exchange rate revaluation, devaluation, appreciation.
Revaluation is the official increase in the price of the currency within a fixed exchange rate system. This paper attempts an empirical investigation of the impact of currency devaluation on nigeria trade balance using the. Devaluation, the deliberate downward adjustment in the official exchange rate, reduces the currency s value. Devaluation, depreciation, revaluation and appreciation.
Depreciation may enhance peoples expectation of inflation, and domestic consumption will be stimulated. Exchange rate revaluation, devaluation, appreciation, depreciation. In this video, we will understand the concepts of devaluation, depreciation, revaluation and appreciation of currency. Devaluation is the deliberate lowering of the exchange rate while revaluation is the deliberate rise of the exchange rate. Pdf impact of currency devaluation on pakistans economy. Since the economic reform started in 1979, the chinese currency yuan had been devalued several times until 1994 when the twotier foreign exchange system. This video is suitable for the students of class 12, and other commerce. Pdf devaluation and its impact on money supply growth. Under a floating exchange rate system, market forces generate changes in the value of the currency, known as currency depreciation or appreciation. In this case we can say there was a 15% appreciation in the value of the pound against the euro between jan 2009 and. Pdf currency devaluation is an important topic in the history of international economics and finance. The economic impact of the chinese yuan revaluation citeseerx. Lowering of the home currencies as compared to foreign currencies will. Pdf this article studies the effect of currency devaluation on output level of 23 oecd countries using unit.
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