Devaluation

This article talks about Devaluation, which improve a country’s balance of payments situation by boosting exports and reducing imports, but it worsens inflation for imported goods or those having significant import content. It is a monetary policy tool used by countries that have a fixed exchange rate or semi-fixed exchange rate. It is most often used in a situation where a currency has a defined value relative to the baseline. Devaluation is often confused with depreciation, and is the opposite of revaluation.