Undervalued Currency

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Undervalued Currency

A currency with an exchange rate lower than it ought to be. A currency may be undervalued, for example, when its purchasing power, supply and demand are all strong, but its price is still comparatively low. Some governments keep their currencies undervalued deliberately because it makes their exports less expensive, but this is usually an unsustainable policy. See also: Weakening of a currency.
References in periodicals archive ?
One theory is that employers stopped driving for productivity after the pound's exit from the Exchange Rate Mechanism in 1992 had presented industry with an under-valued currency and no incentive to do more.
One theory is that employers stopped driving for productivity after the pound's exit from the Exchange Rate Mechanism in 1992 presented industry with an under-valued currency and no incentive to do more.