Practicing Success
Decrease in value of domestic currency to foreign currency in fixed exchange rate system is called : |
Depreciation Devaluation Appreciation Revaluation |
Devaluation |
Fixed Exchange Rates: In this exchange rate system, the Government fixes the exchange rate at a particular level. In a fixed exchange rate system, when some government action increases the exchange rate (thereby, making domestic currency cheaper) is called Devaluation. On the other hand, a Revaluation is said to occur, when the Government decreases the exchange rate (thereby, making domestic currency costlier) in a fixed exchange rate system. |