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In macroeconomics and modern monetary policy, a devaluation is an official lowering of the value of a country's currency within a fixed exchange-rate system, in which a monetary authority formally sets a lower exchange rate of the national currency in relation to a foreign reference currency or currency basket.
For example, a surge in purchases of foreign goods by home country residents will cause a surge in demand for foreign currency with which to pay for those goods, causing a depreciation of the home currency. And the other way around, if there is an inflow of foreign currency to a country, it creates demand for the home currency.
Brazilian Finance Minister Guido Mantega, who made headlines when he raised the alarm about a currency war in September 2010. Currency war, also known as competitive devaluations, is a condition in international affairs where countries seek to gain a trade advantage over other countries by causing the exchange rate of their currency to fall in relation to other currencies.
Currency intervention, also known as foreign exchange market intervention or currency manipulation, is a monetary policy operation. It occurs when a government or central bank buys or sells foreign currency in exchange for its own domestic currency, generally with the intention of influencing the exchange rate and trade policy.
Argentina on Tuesday announced a sharp devaluation of its currency and cuts to energy and transportation subsidies as part of shock measures new President Javier Milei says are needed to deal with ...
The Currency War of 2009–2011 was an episode of competitive devaluation which became prominent in the financial press in September 2010. It involved states competing with each other in order to achieve a relatively low valuation for their own currency, so as to assist their domestic industry.
And if China devalued its currency, it could pay even more benefits, Edwards said. “China perhaps needs to learn some lessons from Japan, i.e., devalue to export domestic deflation,” he wrote ...
Indeed, gold investments could potentially combat the effects of currency devaluation and inflation. For those who share Paulson’s concerns, there are many ways to gain exposure to gold than ...