Devaluation of Rupee
refers to the fall in the value of rupee in terms of foreign currency.
Specifically, it implies deliberate official lowering of the value of the
country's currency with respect to the foreign currency.
Devalutaion prevails
under the fixed exchange rate regime. This implies that value of rupee has
fallen and the value of foreign currency has risen. It means that now (after devaluation)
one US$ can be exchanged for more rupees. This encourages exports and
discourages imports as the former is cheaper now for foreign countries and the
latter is expensive for Indians.
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