Devaluation is a deliberate downward adjustment of a currency's value, typically carried out by a central bank that maintains a fixed or managed exchange rate, in order to boost export competitiveness or relieve pressure on reserves. It's distinct from depreciation, which describes a currency weakening naturally through market forces rather than policy action.
Devaluations can happen abruptly and produce large single-day price gaps, which is a key reason pegged or managed currencies can carry outsized risk for leveraged traders.
Devaluation
A deliberate central-bank decision to lower a currency's fixed or managed exchange rate, often to boost exports or ease reserve pressure.
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