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Class 12 Tuition > Learn Economics > What do you understand by devaluation of rupee?
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What do you understand by devaluation of rupee?

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Devaluation of the Rupee refers to the fall in the value of rupee in terms of foreign currency. Specifically, it implies deliberate official lowering of the value of the country's currency with respect to the foreign currency. Devalutaion prevails under the fixed exchange rate regime.
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When the government deliberately lowers the value of its currency i.e. reduces the purchasing power of its own currency, it is called devaluation of the currency. Devaluation of rupee by the government of India will reduce the cost of exports (exports will be cheaper, hence more foreigners will buy...
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When the government deliberately lowers the value of its currency i.e. reduces the purchasing power of its own currency, it is called devaluation of the currency. Devaluation of rupee by the government of India will reduce the cost of exports (exports will be cheaper, hence more foreigners will buy our products) and increase the cost of imports (purchasing from foreign countries will be expensive). This will help in reducing the trade deficit. read less
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Devaluation of rupee means a deliberate downward adjustment in the official exchange rate of rupee relative to other currencies. For example, if the dollar-rupee exchange rate, which was 1=Rs50,ischangedto 1 = 60 under a fixed exchange rate system by the government, then in such an instance, the rupee...
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Devaluation of rupee means a deliberate downward adjustment in the official exchange rate of rupee relative to other currencies. For example, if the dollar-rupee exchange rate, which was1=Rs50,ischangedto1 = 60 under a fixed exchange rate system by the government, then in such an instance, the rupee is said to be devalued. There were two important implications of the devaluation of rupee in 1991. First, devaluation made India's exports relatively less expensive for foreigners and increased their competitiveness and second, it made foreign products relatively moreexpensive for domestic consumers, discouraging imports. read less
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When government reduces value of its own currency in comparison to other foreign currency is know as devaluation of currency.
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