Legal Definitions - devaluation

Definition: Devaluation is when the value of one currency decreases compared to another currency. This is different from revaluation, which is when the value of a currency increases.

Example: Let's say that one US dollar is worth one euro. If the US dollar is devalued, it might now be worth only 0.8 euros. This means that it takes more US dollars to buy the same amount of goods or services that could be purchased with fewer dollars before the devaluation.

Another example: In 2016, the United Kingdom voted to leave the European Union. This caused the value of the British pound to decrease compared to other currencies, including the US dollar and the euro. This was a devaluation of the pound.

These examples illustrate how devaluation can affect the purchasing power of a currency. When a currency is devalued, it becomes less valuable compared to other currencies. This can make imports more expensive and exports cheaper, which can have an impact on international trade and the economy as a whole.