Which of the following is revaluation of currency in fixed exchange r…

The correct answer is Option (2) → When the government decreased the exchange rate

• Devaluation (Increase in rate): If the rate moves from $1\; dollar=70$ to $80$, the rate has increased. This makes the domestic currency cheaper/weaker because you need more of it to buy one dollar.

• Revaluation (Decrease in rate): If the rate moves from 1 dollar =70 to $60$, the rate has decreased. This makes the domestic currency costlier/stronger because you need fewer units of it to buy one dollar. 

NCERT: "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."