Devaluation, the deliberate downward adjustment in the official exchange rate, reduces the currency's value; in contrast, a revaluation is an upward change in the currency's value. ... This would make its currency half as expensive to Americans, and the U.S. dollar twice as expensive in the devaluing country.

What happens when a currency is devalued?

Devaluation reduces the cost of a country's exports, rendering them more competitive in the global market, which, in turn, increases the cost of imports. ... In short, a country that devalues its currency can reduce its deficit because there is greater demand for cheaper exports.

How does a country devalue its currency?

Devaluation occurs when a government wishes to increase its balance of trade (exports minus imports) by decreasing the relative value of its currency. ... By making its own currency cheaper, the country can boost exports. At the same time, foreign products become more expensive, so imports fall.