Why a Country Devalue Its Currency Today?

Why a country devalue its currency today?

A country might chose to devalue its currency to a lower lever relative to foreign currencies in order to obtain the economic objectives and stimulate the economy of the country. Some of the objectives and reasons for devaluation that will be mentioned are; to keep the currency’s fixed exchange rate, to encourage export and discourage import, to correct balance of payments, to increase demand for domestic product and to fight unemployment rate, deal with flight of domestic currency as well as and lack of foreign demand for the domestic currency, due to recession, and due to currency war.

Since the price to buy the currency decreases when it is devalued, it will encourage the country’s export due to the fact that the commodities of the country will be cheaper for foreigners. Furthermore, the devaluation will discourage import since the price of foreign products will increase. The increased export and decreased import will help to correct the country’s balance of payment and trade deficit. Another policy that can cause a country to devalue its currency is to increase the aggregate demand domestic products in order to fight high unemployment rates.

Why a country devalue its currency today?

A country might chose to devalue its currency to a lower lever relative to foreign currencies in order to obtain the economic objectives and stimulate the economy of the country. Some of the objectives and reasons for devaluation that will be mentioned are; to keep the currency’s fixed exchange rate, to encourage export and discourage import, to correct balance of payments, to increase demand for domestic product and to fight unemployment rate, deal with flight of domestic currency as well as and lack of foreign demand for the domestic currency, due to recession, and due to currency war.

Since the price to buy the currency decreases when