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Finance & Banking vocabulary · Interest & Exchange Rates

Devaluation

Meaning in finance & banking, with examples

/ˌdiːvæljuˈeɪʃən/nounCommon term

In finance & banking, devaluation means: An official decision by a government or central bank to lower the value of its currency against other currencies, usually under a fixed exchange rate system.

In Turkish: devalüasyon, değer düşürme

How it is used

Used in economics, treasury and news. A country announces or carries out a devaluation; the verb is 'devalue'. Strictly, devaluation is a policy decision, while a currency that falls in a free market 'depreciates'. Devaluations make exports cheaper but raise the cost of imports and foreign currency debt.

Example sentences

  1. The devaluation made the country's exports cheaper but raised the cost of imported energy.

  2. Companies with dollar loans were hit hardest by the devaluation.

Common collocations

  • currency devaluation
  • announce a devaluation
  • sharp devaluation
  • competitive devaluation
  • exchange rateThe price of one currency in terms of another, for example how many Turkish lira you need to buy one euro.
  • depreciationSpreading the cost of a long-term physical asset, such as a machine or building, over its useful life; also a fall in the value of a currency or asset.
  • appreciateOf a currency or asset: to rise in value over time. The opposite is 'depreciate'.
  • inflationA general rise in prices over time, which means that the same amount of money buys less than before.
  • foreign exchangeThe buying and selling of currencies, or foreign currency itself. It is often shortened to FX or forex.

This word in other fields

The same English word can have a different meaning in another field:

More terms: Interest & Exchange Rates

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This page explains English vocabulary for learners. It is not financial advice.