A devaluation means there is a fall in the value of a currency. The main effects are: Exports are cheaper to foreign customers. ... In the short-term, a devaluation tends to cause inflation, higher growth and increased demand for exports.

Does devaluation help exports?

Understanding Devaluation

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. If imports are more expensive, domestic consumers are less likely to purchase them, further strengthening domestic businesses.

How does devaluation affect the exports of a country?

The primary effect of currency devaluation is to increase the price in domestic currency of exports and imports, although these prices may remain unchanged in terms of foreign currencies. Higher domestic prices enable exporters to offer higher prices to producers and encourage importers to shift to domestic goods.