Devaluation

3 definitions

A government action to lower the trade value of a nation's currency with respect to other currencies by decreasing the gold content or by revising the ratio to a new standard.

"Devaluation": A substantial decline in an exchange rate, usually effected in one go by government decree.

The act of a government to lower the fixed exchange rate of its currency. The government maintains a fixed exchange rate by buying and selling its currency at that rate. It implements a devaluation by announcing that it will henceforth buy or sell its currency only at a new, lower exchange rate, which means that it will pay more of its currency for a given amount of foreign currency than it did before the devaluation.