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

In late 2015 and early 2016, markets convulsed amid fears of a Chinese slowdown and that nation’s bungled currency devaluation. — Eric Morath, WSJ, "Fed Faces a Fresh Test: Engineering a Soft Economic Landing," 6 Jan. 2019 In addition, the report found that areas with greater devaluation are more segregated and produce less upward mobility for black children. — Patrick Sisson, Curbed, "Homes owned by black Americans undervalued by billions, says report," 27 Nov. 2018 At the time, luxury companies looked vulnerable to a prolonged sales slowdown after the 2015 devaluation of the Chinese currency and a government crackdown on local officials swapping expensive watches for favors. — Carol Ryan, WSJ, "Short Sellers Have Lost Their Taste for Luxury," 11 Jan. 2019 Turkish Cypriots use the lira as their official currency and its devaluation at around 40 percent against the dollar has hit them hard by severely diminishing their purchasing power. — Menelaos Hadjicostis, Fox News, "Turkish Cypriots protest price hikes from Turkish lira woes," 6 Sep. 2018 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

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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18 Apr 2019

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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