Devaluation which means fall in value of domestic currency in terms of foreign currency takes place in
A)Flexible Exchange Rate regime
B)Fixed Exchange Rate regime
C)Both (a) and (b)
D)Neither

Question

Quizplus · Accepted Answer

Devaluation specifically refers to a deliberate downward adjustment in the value of a country's currency relative to another currency, group of currencies, or standard, and it typically occurs in a fixed exchange rate regime. In a flexible (or floating) exchange rate system, currency values fluctuate according to market forces without direct government intervention, so the term "devaluation" is not applicable.

Devaluation Which Means Fall in Value of Domestic Currency in Terms