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

Frequent flier and credit-card blogs are filled with posts from consumers angry about the devaluation of the SPG Amex card, which costs $95 a year. — Scott Mccartney, WSJ, "Changes to Starwood’s Popular Rewards Card Vex Travelers," 11 July 2018 So far, analysts see few signs that China is aiming for a currency devaluation. — Chelsey Dulaney, WSJ, "Chinese Yuan Rebounds," 12 July 2018 President Mauricio Macri announced in May that Argentina would seek a financing deal with the IMF following a sharp devaluation of it currency and amid a tough global outlook. — Time, "IMF Loans Argentina $50 Billion to Fend Off Economic Implosion," 9 June 2018 One group forecast devaluations of up to 17 percent. — Kenneth R. Harney, miamiherald, "Doomsday predictions over tax cuts have not come true - yet," 13 June 2018 But Barbie now faces the unjust prejudice and devaluation experienced by many women pushing 60 in this patriarchal culture. — Peter Keough, BostonGlobe.com, "An immigrant story, atrocity tourism, the future of Barbie," 28 June 2018 That might spur locals, who recall a brutal devaluation in 2001, to rush into dollars. — The Economist, "How to play Argentina," 14 June 2018 One group forecast devaluations of up to 17 percent. — Kenneth R. Harney, miamiherald, "Doomsday predictions over tax cuts have not come true - yet," 13 June 2018 One group forecast devaluations of up to 17 percent. — Kenneth R. Harney, chicagotribune.com, "Doomsday predictions over tax cuts have not come true — yet," 12 June 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.

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14 Oct 2018

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The first known use of devaluation was in 1914

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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