[rags.rags]

Hi all,

Check out this site...this seems to have a lot of quality articles on eco/fin related topics...A few articles i could understand more than 80% of it without anybody`s help..


http://www.macroscan.org/


Lemme know ur comments after visiting this site.


Cheers
Rags

[raj_chopada2001]

I second that. And yeah, it is a nice initiative. And let the others contribute too. Why only Raj. We can probably discuss the arguments in the edits..pros v/s cons. what say guys?

ya , every body should contribut
ya we can discuss any topic
:grab: :grab:

[raj_chopada2001]

ninja_talli
i think u should visit following site u will get ur answer
if any doubt u can ask
i think u should as particular doublt.
http://www.macroscan.org/

[raj_chopada2001]

Hi,

What is the implication of devaluation of a currency?


first of all what is devaluation of a currency?

A deliberate downward adjustment in the official exchange rates established, or pegged, by a government against a specified standard, such as another currency or gold.

• Under a fixed exchange rate system, devaluation and revaluation are official changes in the value of a country's currency relative to other currencies. Under a floating exchange rate system, market forces generate changes in the value of the currency, known as currency depreciation or appreciation.

• In a fixed exchange rate system, both devaluation and revaluation can be conducted by policymakers, usually motivated by market pressures.

i think u might got answer to basic question.
all defination are from net only

A key effect of devaluation is that it makes the domestic currency cheaper relative to other currencies. There are two implications of a devaluation. First, devaluation makes the country's exports relatively less expensive for foreigners. Second, the devaluation makes foreign products relatively more expensive for domestic consumers, thus discouraging imports. This may help to increase the country's exports and decrease imports, and may therefore help to reduce the current account deficit.
There are other policy issues that might lead a country to change its fixed exchange rate. For example, rather than implementing unpopular fiscal spending policies, a government might try to use devaluation to boost aggregate demand in the economy in an effort to fight unemployment. Revaluation, which makes a currency more expensive, might be undertaken in an effort to reduce a current account surplus, where exports exceed imports, or to attempt to contain inflationary pressures.

Effects of Devaluation
A significant danger is that by increasing the price of imports and stimulating greater demand for domestic products, devaluation can aggravate inflation. If this happens, the government may have to raise interest rates to control inflation, but at the cost of slower economic growth.
Another risk of devaluation is psychological. To the extent that devaluation is viewed as a sign of economic weakness, the creditworthiness of the nation may be jeopardized. Thus, devaluation may dampen investor confidence in the country's economy and hurt the country's ability to secure foreign investment.
Another possible consequence is a round of successive devaluations. For instance, trading partners may become concerned that a devaluation might negatively affect their own export industries. Neighboring countries might devalue their own currencies to offset the effects of their trading partner's devaluation. Such "beggar thy neighbor" policies tend to exacerbate economic difficulties by creating instability in broader financial markets.


that's what i know the implecation of devaluation of a currency.
other implecation are also there but they might be secondary

[raj_chopada2001]

[quote=rags.rags]Hi all,



http://www.macroscan.org/



gd site:grab: :grab:

[rags.rags]

I am in total concord with raj`s views...The more such articles u read n discuss,the more jargons get clarified and u will have no problem in choosing such topics in RC...Also it wud generate interest n increase speed while reading the RCs...As a result ur accuracy n score in VA will increase & we wud reach our final destination easier n smoother.

So be it the most basic questions, v wont hesitate n ask it out..so that newbiez like me wud bebefit ...what say guys?


Cheers
Rags

[rags.rags]

I would like to know the "role n significance of Foreign exchange reserves"

Cheers,


Rags

[paybacktime]

Originally Posted by raj_chopada2001

Hi,

What is the implication of devaluation of a currency?


first of all what is devaluation of a currency?


There are other policy issues that might lead a country to change its fixed exchange rate. For example, rather than implementing unpopular fiscal spending policies, a government might try to use devaluation to boost aggregate demand in the economy in an effort to fight unemployment.

Could not understand this point. Could you kindly elucidate?

[cat makes me mad]

well i think this is a good initiative. but what we really need is someone to discuss basic economics and finance. esp for the benefit for non-commerce folks.

not in terms of finance and economics jargon, but in layman terms.
as to what..things like .... disinvestment , divestment etc. are........

wadyasay........

[chuck_gopal]

@ Raj: Thanks, buddy... Will keep referring this thread as and when I have doubts... Hopefully, later I too will be able to contribute...!
So what were the results when China devalued it's currency last year? Something like that happened, right?

ChUcK