Währungsabwertung

Währungsabwertung refers to a decrease in the value of a country's currency in relation to other currencies. This can happen in a floating exchange rate system where market forces determine the currency's value, or it can be a deliberate policy decision by a government or central bank in a fixed exchange rate system. A floating currency is considered to have depreciated when its exchange rate falls, meaning it buys less of a foreign currency than before.

There are several reasons why a currency might depreciate. Economic factors such as high inflation, a widening trade deficit, or political instability can lead to a loss of confidence in a currency, causing investors to sell it. Lower interest rates compared to other countries can also make a currency less attractive to foreign investors seeking higher returns, leading to a decrease in demand and thus value.

The consequences of currency depreciation can be mixed. For consumers, imported goods become more expensive, potentially leading to higher inflation. For businesses, however, exports become cheaper for foreign buyers, which can boost sales and economic activity. A weaker currency can also make a country a more attractive destination for tourism.

Central banks may intervene to manage currency values, although deliberate devaluation is less common in major economies today. Historically, countries have sometimes devalued their currencies to gain a competitive advantage in international trade, making their exports cheaper and imports more expensive. However, this can also lead to retaliatory devaluations by other countries, a phenomenon known as a currency war.