Devaluation
dee-val-yoo-AY-shun
/ˌdiːvæljuˈeɪʃən/
A deliberate downward adjustment of the value of a country's currency relative to another currency or standard.
This is a policy decision made by a government or central bank, distinct from 'depreciation' which is market-driven.
The story behind the word. The word 'devaluation' combines the Latin prefix 'de-' (meaning 'down' or 'away') with 'valere' (meaning 'to be strong' or 'to be worth'). So, to 'devalue' is literally 'to take away worth' or 'to make less strong.' It specifically refers to a government's deliberate act of reducing its currency's official worth.
Word relationships
- downsizing (of value): More general, can refer to reducing size or scale, not specifically currency value.
- revaluation: A deliberate upward adjustment of a country's currency value by its government.
- appreciation: A market-driven increase in currency value.
Commonly confused with
- Depreciation: Depreciation is a market-driven fall in currency value; devaluation is a deliberate policy decision by a government.
Word family
- devalue (verb): to reduce the value of something.
Collocations
- currency devaluation
- sharp devaluation
- competitive devaluation
- official devaluation
Example sentences
- "The government announced a sudden devaluation of the national currency to make its exports more competitive." Discussing economic policy.
- "After the crisis, the country was forced into a significant devaluation to address its balance of payments deficit." Analyzing historical events.
Memory hook
DEVALUATION is when the government 'DE' (down) 'VALUES' its own currency. They deliberately lower its worth. Government lowers value
When not to use
Do not use 'devaluation' for a market-driven fall in currency value; 'depreciation' is the correct term for that.
Fun facts
- Devaluation can make a country's exports cheaper and imports more expensive, potentially boosting domestic industries but also leading to inflation.
Related words
Explore more words
devalue, Deflation, devolve, degradation, Inflation, deteriorate
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