Dévaluation

Dévaluation is the deliberate downward adjustment of a country's official exchange rate relative to other currencies, typically undertaken in a fixed or managed regime by the central bank or government. The term is used when a government formally lowers the currency's value through an official action, in contrast to depreciation caused by market forces in a floating regime.

A devaluation makes exports cheaper and imports more expensive, potentially improving the trade balance. It can also boost domestic production by shifting relative prices toward local goods. Immediate effects include higher prices for imports, which can contribute to inflation, especially if the economy relies on imported inputs.

Devaluations are typically implemented by revising parity, re-anchoring to a lower level, abandoning a peg, or widening the band. In managed regimes, authorities may intervene in currency markets to enforce the new value. In floating regimes, depreciation is the more common term, though some governments still use devaluation for policy-driven shifts.

Effects depend on expectations and structural factors. A credible devaluation can improve competitiveness and reduce deficits, but it can also raise inflation, increase the burden of foreign-currency debt, and trigger import shocks. Long-run outcomes rely on accompanying reforms.

Historically, devaluations have been common in periods of fixed exchange rates or crisis reforms, including during the Bretton Woods era. The practice remains a macroeconomic tool in some economies, though it carries risks to credibility and financial stability.