A policy undertaken by a nation to reduce the value of its national currency either in relation to gold or in relation to the currencies of other nations.
Devaluation
A deliberate downward adjustment to a country's official exchange rate relative to other currencies. In a fixed exchange rate regime, only a decision by a country's government (i.e central bank) can alter the official value of the currency. Contrast to "revaluation".
Investopedia Commentary
There are two implications for a currency devaluation. First, devaluation makes a country's exports relatively less expensive for foreigners and second, it makes foreign products relatively more expensive for domestic consumers, discouraging imports. As a result, this may help to reduce a country's trade deficit.
Related Links
Dollarization Explained
Getting Started In Forex
A Primer On The Forex Market
See also: Balance of Trade, Central Bank, Currency, Current Account, Deficit, Exchange Rate, Fixed Exchange Rate, Floating Exchange Rate, Revaluation, Surplus
devaluation