ShmoopTube
Where Monty Python meets your 10th grade teacher.
Search Thousands of Shmoop Videos
Investing Videos 424 videos
What is Devaluation? The process by which a nation deliberately lowers the value of its currency relative to other international currencies is call...
What is the Advance Decline Ratio? The advance decline ratio is used to determine how the market performed on a given day. It does this by comparin...
What is speculation? Speculation refers to a high risk, high reward scenario in investing. When an investor engages in a speculation, they take on...
Finance: What is Devaluation? 1 Views
Share It!
Description:
What is Devaluation? The process by which a nation deliberately lowers the value of its currency relative to other international currencies is called devaluation. In international trade, a devalued currency makes exports cheaper and imports more costly, which can help to stimulate more domestic manufacturing business in emerging market countries.
- Social Studies / Finance
- Finance / Financial Responsibility
- College and Career / Personal Finance
- Life Skills / Personal Finance
- Finance / Finance Definitions
- Life Skills / Finance Definitions
- Finance / Personal Finance
- Courses / Finance Concepts
- Subjects / Finance and Economics
- Finance and Economics / Terms and Concepts
- Terms and Concepts / Charts
- Terms and Concepts / Investing
- Terms and Concepts / Trading
Transcript
- 00:00
Finance allah shmoop What is devaluation steve Valuing a currency
- 00:08
i am making it less valuable can only happen when
- 00:12
the government which controls that currency decides to devalue it
- 00:17
So yeah it's a kind of their call when and
- 00:19
how much basically devaluation happens when a country decreases the
Full Transcript
- 00:24
value of its currency against other currencies A lot of
- 00:27
times by just running the printing press all night printing
- 00:30
a whole bunch of their currency there's a whole lot
- 00:32
of supply on the market Well why on earth would
- 00:35
a country ever intentionally do this like devalue their currency
- 00:39
Well usually because it wants its goods to be less
- 00:43
expensive abroad like to be ableto export them more cheaply
- 00:47
to places like the u s and china and russia
- 00:50
by a lot of whatever's Well when a currency is
- 00:53
devalued the homegoods iii the home country goods are cheaper
- 00:57
in other markets This will usually lead to an overall
- 01:01
increase in exports for that country when it comes to
- 01:04
exports and imports though there's a kind of a union
- 01:06
ng ng anyway there's a counterbalance at play here imports
- 01:10
become mohr expensive and consumers at home likely shift away
- 01:15
From foreign teo purchase in country goods right it's kind
- 01:18
of protecting the country's own domestic product there Currency changes
- 01:22
Yeah well the result Yeah strengthened domestic product sales in
- 01:26
all of this might sound hunky dorey But while there
- 01:29
are some potentially nasty side effects local companies are getting
- 01:33
a bit of a break here which might make them
- 01:35
inefficient Slash lazy slash sloppy slash lacking in competitive spirit
- 01:40
to go fight it out in the global markets No
- 01:43
plus one of currency is devalued Each unit is worth
- 01:45
bless and that can lead to inflation which causes all
- 01:48
kinds Other problems down the line So that's just the
- 01:51
nutshell of devaluation making money not worthless But you know 00:01:57.019 --> [endTime] worth less
Related Videos
GED Social Studies 1.1 Civics and Government
What is bankruptcy? Deadbeats who can't pay their bills declare bankruptcy. Either they borrowed too much money, or the business fell apart. They t...
What's a dividend? At will, the board of directors can pay a dividend on common stock. Usually, that payout is some percentage less than 100 of ear...
How are risk and reward related? Take more risk, expect more reward. A lottery ticket might be worth a billion dollars, but if the odds are one in...