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09 March, 2022

Distinguish between Revaluation and Devaluation

 Revaluation means a change of a price of goods or products. This term is specially used as revaluation of a currency, where it means a rise of currency to the relation with a foreign currency in a fixed exchange rate. In floating exchange rate correct term would be appreciation.

Devaluation in modern monetary policy is a reduction in the value of a currency with respect to those goods, services or other monetary units with which that currency can be exchanged. It means official lowering of the value of a currency within a fixed exchange rate system, by which the monetary authority formally sets

a new fixed rate with respect to a foreign currency.