Translated from English, devaluation literally means depreciation. This term is used in economics and denotes a decrease in the purchasing power of the national currency and its depreciation in relation to the currencies of other countries. Since the main world currency is the dollar, it is mainly used as a reference unit. With a devaluation, the price of the national currency, expressed in dollars, decreases.
In fact, money is not only the equivalent of the value of a particular commodity, but it itself has a certain value. The commodity content of the country's monetary unit can be more accurately expressed through the value of the consumer basket. After all, the exchange rate of foreign countries can also fluctuate due to various economic or political reasons. The cost of a consumer basket is the cost of a fixed qualitatively and quantitatively set of essential goods. This list is fixed by law and can change over time in connection with the growing needs of the person. The change in the value of the consumer basket means that at different periods of time it is necessary to pay for it a different amount of money. If yesterday such a basket cost 50 rubles, and today it is 100, we can talk about a 100% depreciation of the ruble and inflation, but this is not a devaluation yet, although it is a consequence of these processes, but it is not enough that the cost of the consumer basket simply increased. In order for the devaluation to be officially recognized, an official government decision is required to change the exchange rate of the national currency against the currencies of foreign states. Those. devaluation is inherently a deliberate decision, enshrined in the relevant document. The reason for the devaluation measures is the reduction and shortage of foreign exchange reserves. It is accompanied by a deficit of the strongest and most reliable currency, such as, for example, the dollar or the euro. When the government does not want to spend this currency, it increases its value until supply and demand balance each other. This willful decision allows the government to reduce foreign exchange spending by attracting the national currency into the economy, which has a positive effect on the economy. There is a rise in the cost of imported goods purchased for foreign currency. Therefore, devaluation gives local producers a chance to push their goods to the market. At the same time, the national product exported abroad becomes cheaper for foreign consumers, therefore its competitiveness increases. Devaluation is a direct consequence of the economic and industrial recession. If a country does not produce its own goods, then it is forced to import them from abroad, the flow of imports cannot be stopped, therefore, over time, more and more money becomes necessary to pay for the same amount of imported goods.
