What do you mean by revaluvation and devaluation of Currency ?? Why do they revaluvate and devaluvate the currency ???
Revaluation is an increase in the value of the domestic currency in terms of the foreign currency. This means that the domestic currency has become more expensive in terms of the foreign currency. Example:
|Exchange Rate||Value of Re 1 in terms of US$||Change|
USD 1 = Rs 50
USD 1 = Rs 40
Indian rupee revalued as the value of rupees in terms of dollar increased from 0.02 to 0.025.
The definition of Devaluation is given in our NCERT solutions.
Use the link below to view the answer.
(Short Answers – Question -5)
Devaluation/ Revaluation of currency takes place under Fixed Exchange Rate System. In the present world, we use Flexible Exchange Rate System. In Flexible Exchange Rate System, Devaluation become depreciation and Revaluation becomes Appreciation.
Devaluation or Revaluation are done to maintain an adequate amount of foreign reserves with the country. Devaluation is done in order to encourage exports from the country and discourage imports into the devaluing country. Similarly, revaluation is done to encourage imports into the country and discourage exports from the country.