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

But the original Zimbabwe dollar was abandoned in 2009 after years of economic upheaval, currency devaluation and devastating hyperinflation. — Chris Muronzi, Quartz Africa, "The Zimbabwean dollar makes a return a decade later but uncertainty reigns," 26 June 2019 Others are contemplating whether to sell rather than risk property devaluation or loss of lakefront access. — Josh Baugh, ExpressNews.com, "Residents of Guadalupe River lakes brace for worst," 22 June 2019 The devaluation of nuanced, socially conscious thinking about power and its effects contradicts the spirit of the very passage from Notes on the State of Virginia Coleman echoed. — Annie Abrams, The New Republic, "The College Board Hopes to Profit from “Adversity”," 6 June 2019 Multiple peso devaluations also accompanied that horrible inflation record. — Steve H. Hanke And John Greenwood, WSJ, "The Dollar, Not the IMF, Can Save Argentina," 26 Sep. 2018 Rapid devaluation of the local currency against the U.S. dollar — also used as official currency — has seen basic items such as cooking oil changing prices several times a day. — Fox News, "'We are trapped': Zimbabwe's economic crunch hits passports," 16 June 2019 Mexico is no stranger to economic crises caused by faulty government policies, suffering major devaluations in 1976, 1982 and 1994. — Kevin Sieff, Washington Post, "The story must be told.," 20 June 2018 The rout exceeded selloffs that followed China’s shock devaluation of the yuan in 2015, the Brexit vote in 2016 and jitters heading into the most recent U.S. presidential election. — Joanna Ossinger, Bloomberg.com, "Five Things You Need to Know to Start Your Day," 5 Feb. 2018 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

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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8 Jul 2019

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The first known use of devaluation was in 1914

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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