devaluation

noun
de·​val·​u·​a·​tion | \ (ˌ)dē-ˌval-yə-ˈwā-shən How to pronounce devaluation (audio) , -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 The Italian lira cratered too, the last of its numerous 20th century devaluations. Viktoria Dendrinou, Bloomberg.com, "Italy’s Broken Finances Bring Back Fears of Messy Euro Divorce," 13 May 2020 Brookings defines devaluation at the percent discount in home values between majority-black and not majority-black neighborhoods. Alexandria Burris, Indianapolis Star, "Home values in black neighborhoods $41,000 lower than Marion County as whole, study says," 24 Feb. 2020 And growing reliance on foreign coal and oil imports causes economic insecurity; India's currency has suffered rapid devaluations during global oil crises. Varun Sivaram, Scientific American, "Can India Save the Warming Planet?," 1 May 2017 Still, structural characteristics and amenities do not fully explain the devaluation of homes in black areas. Alexandria Burris, Indianapolis Star, "Home values in black neighborhoods $41,000 lower than Marion County as whole, study says," 24 Feb. 2020 Then, the North American Free Trade Agreement passed, which, coupled with a crippling peso devaluation in Mexico, helped spur a mass migration of workers north. Melissa Del Bosque, ProPublica, "A Group of Agents Rose Through the Ranks to Lead the Border Patrol. They’re Leaving It in Crisis.," 10 Feb. 2020 Combined with the Fed’s purchases of dollars, the swaps helped protect nervous foreign central banks from the dangers of a dollar devaluation. The Economist, "Multi-coloured swap shop The dollar is in high demand, prone to dangerous appreciation," 21 Mar. 2020 Much of that demand is down to bureau de change operators hoarding dollars while speculators attempt to hedge against potential naira losses in the event of a devaluation. Yomi Kazeem, Quartz Africa, "The coronavirus outbreak and tumbling oil prices are triggering a dollar shortage in Nigeria," 12 Mar. 2020 The shock devaluation in 2015 was followed by tighter capital curbs and sudden spikes in borrowing costs. Washington Post, "How China’s Trying to Woo Foreigners to Buy Bonds," 27 Sep. 2019

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.

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First Known Use of devaluation

1914, in the meaning defined at sense 1

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Time Traveler for devaluation

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The first known use of devaluation was in 1914

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Last Updated

9 Jun 2020

Cite this Entry

“Devaluation.” Merriam-Webster.com Dictionary, Merriam-Webster, https://www.merriam-webster.com/dictionary/devaluation. Accessed 4 Jul. 2020.

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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 How to pronounce devaluation (audio) \

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

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Comments on devaluation

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