devaluation

noun
de·​val·​u·​a·​tion | \ (ˌ)dē-ˌval-yə-ˈwā-shən, -yü-ˈā-\

Definition of devaluation 

1 : an official reduction in the exchange value of a currency by a lowering of its gold equivalency or its value relative to another currency
2 : a lessening especially of status or stature : decline

Examples of devaluation in a Sentence

Recent Examples on the Web

Pena Nieto presided over a devaluation of almost 50 percent in the Mexican peso, and the economy grew by an anemic average of 2.1 percent annually in his first five years in office. Mark Stevenson, The Seattle Times, "Mexican president blames state, local police for crime surge," 3 Sep. 2018 But ever since the devaluation of its currency, in early 2002, my trips to its capital, Buenos Aires, have been highly focused, die-hard shopping missions. Suzy Buckley, Town & Country, "Buy for Me, Argentina," 14 Jan. 2013 The People’s Bank of China, for its part, vowed over the weekend to refrain from any competitive devaluations of its currency. Josh Zumbrun, WSJ, "U.S. Criticizes China’s Currency Practices, but Doesn’t Add Manipulator Designation," 18 Oct. 2018 Macri also dropped the previous government's foreign exchange controls, ushering in the sharp devaluation of the peso. Almudena Calatrava, Fox News, "Argentines seek soup kitchens, barter markets amid crisis," 10 Sep. 2018 The two countries are also working on a related agreement on currency manipulation aimed at securing Seoul’s commitment to avoid competitive devaluations of its currency. Bloomberg.com, "U.S. Pushes for Quick Nafta Agreement But Canada Needs Details," 29 Mar. 2018 Both Spain and Italy had a history of high inflation and currency devaluation to keep their exports competitive, which forced them to pay more to borrow. Greg Ip, WSJ, "Why Italy Is Flirting with Euro Exit and Spain Isn’t," 3 June 2018 The specter of capital flight started to emerge late last year, following the central bank’s surprise devaluation of the yuan in August 2015. Nathaniel Taplin, WSJ, "Has the Big Yuan Short Finally Arrived?," 26 June 2018 While currency devaluations such as this are sometimes tied to issues such as a trade imbalance or slumping oil prices, Iran's non-oil imports in 2017 were $47 billion, with oil sales at $55 billion, leaving a currency surplus of $17 billion. Sean Savage, Jewish Journal, "Iran's plummeting currency reflects country's economic, military concerns," 17 Apr. 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'devaluation.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

See More

First Known Use of devaluation

1914, in the meaning defined at sense 1

Keep scrolling for more

Learn More about devaluation

Share devaluation

Dictionary Entries near devaluation

devaloka

devalorize

devaluate

devaluation

devalue

Devanagari

devance

Statistics for devaluation

Last Updated

23 Dec 2018

Look-up Popularity

Time Traveler for devaluation

The first known use of devaluation was in 1914

See more words from the same year

Keep scrolling for more

More Definitions for devaluation

devaluation

noun

Financial Definition of devaluation

What It Is

Devaluation refers to a decrease in a currency's value with respect to other currencies.

How It Works

A currency is considered devalued when it loses value relative to other currencies in the foreign exchange market. A currency's devaluation is the result of a nation's monetary policy.

A central bank can make the conscious effort to make its currency less valuable. If Country XYZ's currency is set at a fixed exchange rate of 2:1 to the U.S. dollar and, due to a weak economy, XYZ cannot afford to pay the interest rate on its debt outstanding, XYZ may devalue their currency. This means the central bank of XYZ will declare their fixed exchange rate to be 10:1 to the U.S. dollar. This makes their debt outstanding is now worth five times less. It's a very tricky maneuver with grave economic consequences.

Why It Matters

Whether deliberate or as a result of market climate, currency devaluation reduces the price of a country's domestic output. This has the potential to benefit the economy by helping to increase its export volume. Conversely, import volumes become stifled as the price of foreign-produced goods and services increases dramatically.

The opposite of devaluation is known as revaluation.

For a more thorough explanation of currency devaluation, how China manipulates its currency worth and the economic impact following Argentina's devaluation, please read this educational article: How Money Manipulation on the Other Side of the World Could Affect American Portfolios

Source: Investing Answers

devaluation

noun
de·​val·​u·​ation | \ (ˌ)dē-ˌval-yə-ˈwā-shən \

Legal Definition of devaluation 

1 : an official reduction in the exchange value of a currency by a lowering of its gold equivalency or its value relative to another currency
2 : a lessening of the value of something (as an asset) portfolio devaluation

Keep scrolling for more

More from Merriam-Webster on devaluation

Rhyming Dictionary: Words that rhyme with devaluation

Spanish Central: Translation of devaluation

Nglish: Translation of devaluation for Spanish Speakers

Britannica.com: Encyclopedia article about devaluation

Comments on devaluation

What made you want to look up devaluation? Please tell us where you read or heard it (including the quote, if possible).

WORD OF THE DAY

a person who helps groups work together

Get Word of the Day daily email!

Test Your Vocabulary

Liar, Liar Quiz

  • alt-5761dbe2ba986
  • Someone who pretends to be sick in order to avoid work is a:
Name That Thing

Test your visual vocabulary with our 10-question challenge!

TAKE THE QUIZ
Word Winder's CrossWinder

Test Your Knowledge - and learn some interesting things along the way.

TAKE THE QUIZ

Love words? Need even more definitions?

Subscribe to America's largest dictionary and get thousands more definitions and advanced search—ad free!