Currency devaluation


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Currency devaluation

A deliberate downward adjustment in the official exchange rates established, or pegged, by a government against a specified standard, such as another currency or gold.

Devaluation

The active decision of a government to reduce the value of its own currency vis a vis other currencies. Devaluation occurs exclusively in fixed currencies, when the currency in question is pegged to another currency. Governments devalue their own currencies to make their exports less expensive in foreign markets. If a company exports its products for the same price in the local (devalued) currency, it is cheaper for consumers to buy those products in their own currency. See also: Depreciation.
References in periodicals archive ?
Amidst the currency devaluation fiasco, there are two different types of opinions which came on the scene.
For the second quarter of 2017, foreign currency translation impact, predominantly due to the 61 percent currency devaluation in Sudan cost the company $157 million in revenue, $62 million in EBITDA and $25 million in net income.
The category is expected to start recovering from the recession and local currency devaluation somewhat in 2018 (from negative to 2%), and volume sales growth will be 3% in 2019 and 4% in 2020.
As a result, a currency devaluation does little to increase the volume of their exports but does increase their profits.
"Dear customer, due to currency devaluation all rates have been change," read a text message Vivacell mobile communication company sent to its clients this week.
In isolation, currency devaluation improves global competitiveness, but if what follows are further rounds of devaluations from competing economies, then a currency war may begin; and this is rarely a force for good in the global economy.
But tough trading in its largest market, Nigeria, because of the Ebola outbreak, presidential election and a currency devaluation, took the shine off the results.
But tough trading in their largest market, Nigeria, because of Ebola, a presidential election and a currency devaluation, took the shine off.
Further pressure on capital ratios from currency devaluation could arise as we expect banks' credit costs in 2015 slightly more than double from 1.5% of gross loans reported in 2014.
In tandem with the currency devaluation, the CBE imposed daily and monthly limits ($10,000 and $50,000, respectively) on dollar deposits in local banks in an attempt to stifle the black market for foreign exchange.
The rating agency said the actions were prompted by the six banks' exposure to adverse changes in the country's already very challenging operating environment, including persistently high inflation, the national currency devaluation in the period December 2014-January 2015, the economy's low growth potential, a wide current account deficit, and high vulnerability to external shocks with increased risk of withdrawal of Russian financial support as a result of deteriorating economic conditions in Russia (Ba1 negative).
Praxair estimates that the currency devaluation to the SICAD II rate will reduce the Company s full-year 2015 revenues by approximately $100 million and diluted earnings per share by about $0.07 as compared to 2014.