A decrease in the official value of a currency in a fixed-exchange-rate system is called a(n)

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In a fixed-exchange-rate system, the value of a currency is fixed to another currency or a basket of currencies. If the official value of a currency is decreased intentionally in this system, it is called a devaluation. This is done to make the currency more competitive in international markets, increase export competitiveness, and improve the balance of trade. Revaluation, on the other hand, is the opposite of devaluation and refers to an increase in the official value of a currency. Appreciation and depreciation are similar terms but are used in floating exchange rate systems where the value of a currency is determined by the market forces of supply and demand. Overvaluation refers to a situation where the market value of a currency is higher than its real value, which can lead to a decrease in demand for that currency.

A Decrease in the Official Value of a Currency in a Fixed-Exchange-Rate