Revaluation
What is revaluation?
A decision to deliberately adjust the exchange rate of a particular currency. This can occur in countries with fixed exchange rates, with a central bank or government making the decision.
Revaluation is specifically an upward adjustment of a country's official exchange rate. A downward adjustment is referred to as a devaluation.
Where have you heard about revaluation?
A country may look to revalue its currency in order to increase its buying power. But currency alterations have proven controversial at times, with the International Monetary Fund suggesting countries should steer clear of any decisions that would give them an unfair advantage over competitors.
What you need to know about revaluation.
Countries with fixed exchange rates are able to revalue their currency in line with a specific baseline. This baseline could be a foreign currency or the price of gold.
China is one example of a country that regulates the exchange rate of its currency. When reviewing the value of the yuan, its central bank uses a basket of global currencies as its baseline.
While revaluation can improve the buying power of a particular currency, it can harm countries that have a strong export industry by making their goods more expensive overseas.
Find out more about revaluation.
Revaluations can have a significant impact on global currency markets. To learn more, see currency pair.
