What does devaluation of a currency against a foreign currency result in?
Answer & explanation
Correct answer: option 1
The correct answer is Option 1: Increase in the inflow of foreign exchange
Devaluation of a currency means that now the imports would be expensive and exports would be cheaper. Thus, resulting in increased exports of the country and improving the overall position of balance of payment. When exports increase, flow of foreign exchange increase simultaneously. Thus, option 1 stands to be correct.