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Devaluation of a currency means
- a)reduction in the value of a currency vis-a-vis major internationally traded currencies
- b)permitting the currency to seek its worth in the international market
- c)fixing the value of the currency in conjunction with the movement in the value of a basket of pre-determined currencies
- d)fixing the value of currency in multilateral consultation with the IMF, the World Bank and major trading partners
Correct answer is option 'A'. Can you explain this answer?
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Devaluation of a currency meansa)reduction in the value of a currency ...
Devaluation of a currency refers to the deliberate reduction in the value of a country's currency in relation to other major internationally traded currencies. This is usually done by the government or central bank of a country to achieve certain economic objectives.
There are several reasons why a country may choose to devalue its currency:
1. Boosting Exports: One of the main reasons for devaluing a currency is to make exports more competitive in the international market. When a country's currency is devalued, its goods and services become cheaper for foreign buyers, leading to an increase in demand and potentially higher export volumes.
2. Correcting Trade Imbalances: Devaluation can also help correct trade imbalances by reducing imports and increasing exports. When a country's currency is devalued, it becomes more expensive for the country to import goods from other countries. This can encourage domestic production and consumption, reducing reliance on imports and narrowing the trade deficit.
3. Stimulating Economic Growth: Devaluation can stimulate economic growth by boosting domestic industries. When a country's currency is devalued, it becomes cheaper for foreign investors to invest in the country. This can lead to increased foreign direct investment (FDI), job creation, and overall economic growth.
4. Debt Repayment: Devaluation can make it easier for a country to repay its external debt. When a currency is devalued, the value of the debt in terms of the country's own currency decreases. This reduces the burden of debt repayment for the country.
It's important to note that devaluation is different from depreciation. Depreciation refers to a decrease in the value of a currency in the foreign exchange market due to market forces, while devaluation is a deliberate government policy.
In conclusion, devaluation of a currency involves reducing its value in relation to other major internationally traded currencies. This can be done to achieve various economic objectives such as boosting exports, correcting trade imbalances, stimulating economic growth, and easing debt repayment.
There are several reasons why a country may choose to devalue its currency:
1. Boosting Exports: One of the main reasons for devaluing a currency is to make exports more competitive in the international market. When a country's currency is devalued, its goods and services become cheaper for foreign buyers, leading to an increase in demand and potentially higher export volumes.
2. Correcting Trade Imbalances: Devaluation can also help correct trade imbalances by reducing imports and increasing exports. When a country's currency is devalued, it becomes more expensive for the country to import goods from other countries. This can encourage domestic production and consumption, reducing reliance on imports and narrowing the trade deficit.
3. Stimulating Economic Growth: Devaluation can stimulate economic growth by boosting domestic industries. When a country's currency is devalued, it becomes cheaper for foreign investors to invest in the country. This can lead to increased foreign direct investment (FDI), job creation, and overall economic growth.
4. Debt Repayment: Devaluation can make it easier for a country to repay its external debt. When a currency is devalued, the value of the debt in terms of the country's own currency decreases. This reduces the burden of debt repayment for the country.
It's important to note that devaluation is different from depreciation. Depreciation refers to a decrease in the value of a currency in the foreign exchange market due to market forces, while devaluation is a deliberate government policy.
In conclusion, devaluation of a currency involves reducing its value in relation to other major internationally traded currencies. This can be done to achieve various economic objectives such as boosting exports, correcting trade imbalances, stimulating economic growth, and easing debt repayment.
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Devaluation of a currency meansa)reduction in the value of a currency vis-a-vis major internationally traded currenciesb)permitting the currency to seek its worth in the international marketc)fixing the value of the currency in conjunction with the movement in the value of a basket of pre-determined currenciesd)fixing the value of currency in multilateral consultation with the IMF, the World Bank and major trading partnersCorrect answer is option 'A'. Can you explain this answer?
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Devaluation of a currency meansa)reduction in the value of a currency vis-a-vis major internationally traded currenciesb)permitting the currency to seek its worth in the international marketc)fixing the value of the currency in conjunction with the movement in the value of a basket of pre-determined currenciesd)fixing the value of currency in multilateral consultation with the IMF, the World Bank and major trading partnersCorrect answer is option 'A'. Can you explain this answer? for Railways 2024 is part of Railways preparation. The Question and answers have been prepared according to the Railways exam syllabus. Information about Devaluation of a currency meansa)reduction in the value of a currency vis-a-vis major internationally traded currenciesb)permitting the currency to seek its worth in the international marketc)fixing the value of the currency in conjunction with the movement in the value of a basket of pre-determined currenciesd)fixing the value of currency in multilateral consultation with the IMF, the World Bank and major trading partnersCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for Railways 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Devaluation of a currency meansa)reduction in the value of a currency vis-a-vis major internationally traded currenciesb)permitting the currency to seek its worth in the international marketc)fixing the value of the currency in conjunction with the movement in the value of a basket of pre-determined currenciesd)fixing the value of currency in multilateral consultation with the IMF, the World Bank and major trading partnersCorrect answer is option 'A'. Can you explain this answer?.
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