A devaluation switches expenditures from foreign to domestic commodities and can be used to correct a deficit in the nation's balance-of-payments.

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A devaluation of a nation's currency makes its exports cheaper and imports more expensive, which encourages domestic production and increases foreign demand for domestic goods. As a result, a devaluation can help to reduce a deficit in the nation's balance-of-payments by switching expenditures from foreign to domestic commodities.

A Devaluation Switches Expenditures from Foreign to Domestic Commodities and Can