Devaluation vs Revaluation Essay Example

ers. Second, the devaluation makes foreign products relatively more expensive for domestic consumers, thus discouraging imports. This may help to increase the country's exports and decrease imports, and may therefore help to reduce the current account deficit. Revaluation is an upward adjustment in the value of currency with respect to another currency or a benchmark rate of exchange.

Currency revaluation has the ability to redistribute wealth inside of an economy because of the influence of other economies on the marketplace. If a government increases the value of its currency relative to other currencies, businesses with more domestic assets and investments will increase in value more than businesses with more foreign currency assets. Increasing a currency's value can also improve the economic standing of domestic households, providing them with additional purchasing power.