CUET Preparation Today
Devaluation of domestic currency will make: |
Imports and Exports both become expensive Imports become expensive and Exports become cheaper Imports become cheaper and Exports become expensive Imports and Exports both become cheaper |
Imports become expensive and Exports become cheaper |
We know that devaluation of currency is the increase in the exchange rate of 2 countries. It encourages the exports of the country. Devaluation of domestic currency make exports cheaper for the foreign country residents, due to which the exports of domestic country increases. Goods which were available at 1 dollar for the foreign residents are now available at 1/2 dollar only because the domestic currency had devalued ( earlier 1 dollar = Rs70, now 1 dollar = Rs140). Similarly, the imports become expensive for the domestic country, which results in decrease of imports. Earlier we had to pay Rs70 for importing a product worth 1 dollar, now that will increase to Rs140 due to devaluation of domestic currency. |
