A government can apply a policy of devaluation to adjust its exchange rate if it believes its currency is overvalued.

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Devaluation is a deliberate downward adjustment of the value of a country's currency relative to another currency, group of currencies or standard. This can help to make a country's exports cheaper and more attractive to foreign buyers and boost its trade surplus. If a government believes its currency is overvalued, it may apply a policy of devaluation to adjust the exchange rate to a more competitive level.

A Government Can Apply a Policy of Devaluation to Adjust