Devaluation
Categories: Forex, International
Devaluing a currency, i.e. making it less valuable, can only happen when the government, which controls that currency...decides to devalue it. So yeah, it’s kinda their call—when, and how much. Basically, devaluation happens when a country decreases the value of its currency against other currencies.
Why on earth would a country ever do this?
Usually, because it wants its goods to be less expensive abroad. When a currency is devalued, the home goods, i.e. the home country goods, are cheaper in other markets. This will usually lead to an overall increase in exports. When it comes to exports and imports though…where there’s a yin, there’s a yang.
There’s a counterbalance at play here. Imports become more expensive, and consumers at home likely shift away from foreign to purchase in-country goods. The result? Strength in domestic products. All of this might sound hunky-dory, but there are some potentially nasty side effects.
Local companies are getting a bit of a break, which might make them inefficient-slash-lazy-slash-sloppy-slash- lacking in competitive spirit. Plus, when a currency is devalued, each unit is worth less...which can lead to inflation. So yeah, that’s devaluation.
Making money…not worthless, but…worth less.
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Finance: What is Devaluation?1 Views
Finance allah shmoop What is devaluation steve Valuing a currency
i am making it less valuable can only happen when
the government which controls that currency decides to devalue it
So yeah it's a kind of their call when and
how much basically devaluation happens when a country decreases the
value of its currency against other currencies A lot of
times by just running the printing press all night printing
a whole bunch of their currency there's a whole lot
of supply on the market Well why on earth would
a country ever intentionally do this like devalue their currency
Well usually because it wants its goods to be less
expensive abroad like to be ableto export them more cheaply
to places like the u s and china and russia
by a lot of whatever's Well when a currency is
devalued the homegoods iii the home country goods are cheaper
in other markets This will usually lead to an overall
increase in exports for that country when it comes to
exports and imports though there's a kind of a union
ng ng anyway there's a counterbalance at play here imports
become mohr expensive and consumers at home likely shift away
From foreign teo purchase in country goods right it's kind
of protecting the country's own domestic product there Currency changes
Yeah well the result Yeah strengthened domestic product sales in
all of this might sound hunky dorey But while there
are some potentially nasty side effects local companies are getting
a bit of a break here which might make them
inefficient Slash lazy slash sloppy slash lacking in competitive spirit
to go fight it out in the global markets No
plus one of currency is devalued Each unit is worth
bless and that can lead to inflation which causes all
kinds Other problems down the line So that's just the
nutshell of devaluation making money not worthless But you know 00:01:57.019 --> [endTime] worth less