Competitive devaluations

Definition

Competitive devaluations occur when countries deliberately lower the value of their national currency to boost exports by making them cheaper on the global market. This can lead to a 'race to the bottom' as nations vie for trade advantages.

Related terms

Currency Wars: Economic conflict resulting from countries competing against each other to achieve a relatively low exchange rate for their own currency.

Bretton Woods Institutions: A collective term for the World Bank and the International Monetary Fund (IMF), established in 1944 to help stabilize international monetary affairs and facilitate post-war economic recovery.

Trade Balance: The difference between a country's exports and imports, indicating whether it has a trade surplus or deficit