Currency Devaluation
a.k.a. Devaluation
A deliberate official cut in the value of a currency that is pegged or managed.
In plain English
A deliberate official cut in the value of a currency that is pegged or managed.
Devaluation is a government or central bank deciding its currency should be worth less, usually by resetting its peg. It is a choice, unlike depreciation, which is the market doing it.
It can make exports cheaper and help a struggling economy compete, but it also makes imports dearer and can stoke inflation. Surprise devaluations, like China's in August 2015, can send shock waves across markets.
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