Define: Devaluation

UK Accounting Glossary

Definition: Devaluation



What is the dictionary definition of Devaluation?

Dictionary Definition


  1. The removal or lessening of something’s value.
  2. The intentional or deliberate lowering of a currency’s value compared to another country’s currency or a standard value — the price of gold for example.
  3. Depreciation.

Advertisement



Full Definition of Devaluation


Devaluation is the reduction in the value of a currency, relative to all other currencies. In a fixed-rate regime, only a country’s central bank can undertake devaluation of its currency. The impact of devaluation is to make exports less expensive to foreign buyers and imports more expensive for domestic buyers. Thus devaluation will shift a country’s trade balance, or balance of payments. Sufficient devaluation is presumed to make a country so much more competitive than other countries that competitive devaluation can in effect be considered the export of unemployment. However, following the Asian currency crisis, there is evidence devaluation is not always expansionary. The IMF has as part of its mission the mandate to discourage devaluation for competitive reasons in order to maintain the stability of exchange rates. The opposite of devaluation is revaluation.


Advertisement




Cite Term


To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
https://payrollheaven.com/define/devaluation/
Modern Language Association (MLA):
Devaluation. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. February 29, 2020 https://payrollheaven.com/define/devaluation/.
Chicago Manual of Style (CMS):
Devaluation. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/devaluation/ (accessed: February 29, 2020).
American Psychological Association (APA):
Devaluation. PayrollHeaven.com. Retrieved February 29, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/devaluation/

Definition Sources


Definitions for Devaluation are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • BusinessDictionary.com
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 9th February 2020.