Devaluation

noun (countable/uncountable)

/diːˌvæljʊˈeɪʃn/

A deliberate downward adjustment by a government or central bank of the official exchange rate of its currency relative to a foreign currency or gold, under a fixed or managed exchange-rate regime. Devaluation differs from depreciation, which is a market-driven decline. India devalued the rupee twice in June 1966 (by 36.5% against the pound sterling) and in July 1991 (two-step devaluation totalling approximately 18-19%) during the balance of payments crisis, the latter marking the inflection point of economic liberalisation.

✍️ Usage in a UPSC answer

India's two-step rupee devaluation of July 1991, orchestrated by Governor S. Venkitaramanan under Finance Minister Manmohan Singh, corrected a chronic current account imbalance and restored export competitiveness while simultaneously signalling commitment to IMF-supported structural adjustment.

Synonyms

currency debasementofficial depreciationexchange-rate reductionmonetary downgrading

Antonyms

revaluationcurrency appreciationupward adjustmentcurrency strengthening

🌱 Word Family

devalue (verb), devalued (adjective), revaluation (noun, antonym), depreciation (related noun), overvaluation (noun)

🔡 Root

Latin de- = down, removal + Medieval Latin valuta = value; French dévaluer = to devalue

📜 Etymology

Formed from Latin prefix de- (reversal, downward) and valuta (value, currency), the latter from Italian valuta (value), cognate with Latin valere (to be worth). The word entered economic discourse in the early 20th century, gaining prominence during the competitive devaluations of the Great Depression era (1930s) that Keynes and the Bretton Woods architects sought to prevent.

🧠 Memory Hook

DE-VALUE-ATION — the government DE-VALUE-s its own currency on purpose. Think of deliberately MARKING DOWN a price tag. Devaluation is an official, intentional price markdown for the rupee.

📝 Seen in UPSC Question Papers

Prelims 2011 — External Sector

Real UPSC previous-year questions whose text uses “Devaluation” — proof this word earns its place on your list.

💰 Indian Economy 📖 Seen in: Indian Economy — Growth, Planning & De...

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