c) devaluation and depreciation of a currency

Cards (8)

devaluation of currency?
decrease in the value of one currency against another under a fixed system.
how can the devaluation of a currency be achieved?
by selling the currency
what's competitive devaluation?
when govt deliberately devalue their own currencies to improve international competitiveness
what system does competitive devaluation occur in?
occurs in a hybrid or fixed exchange rate
what's a depreciation?
fall in the value of the currency under floating exchange rates.
why does depreciation occur ?
naturally due to market forces although govt action e.g lowering I.R might affect it indirectly
where does competitive depreciation occur?
occur in a floating or hybrid exchange rate
how does govt intervention affect competitive depreciation?
govt intervention might directly reduce the value of currency, improving the country's international competitiveness