Revaluation

Revaluation

A calculated adjustment to a country's official exchange rate relative to a chosen baseline. The baseline can be anything from wage rates to the price of gold to a foreign currency. In a fixed exchange rate regime, only a decision by a country's government (i.e. central bank) can alter the official value of the currency. Contrast to "devaluation".

Notes:

For example, suppose a government has set 10 units of its currency equal to one U.S. dollar. To revalue, the government might change the rate to five units per dollar. This would result in that currency being twice as expensive to people buying that currency with U.S. dollars than previously and the U.S. dollar costing half as much to those buying it with foreign currency.

Before the Chinese government revalued the yuan, it was pegged to the U.S. dollar. It is now pegged to a basket of world currencies.

See also: Balance of Trade, Central Bank, Currency, Current Account, Trade Deficit, Devaluation, Exchange Rate, Fixed Exchange Rate, Floating Exchange Rate, Trade Surplus

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Revaluation

An increase in the foreign exchange value of a currency that is pegged to other currencies or gold.