Devaluation is a reduction in the value of the national currency

As already mentioned in the title, devaluation is a lowering of the value of the national currency, and if we talk about the gold standard, then we are talking about a decrease in the gold content of one monetary unit. On a global scale, this is expressed as a decrease in the official value of the national currency relative to the foreign currency.

Devaluation, what is it and what to expect from it?

In the last century, the Russian ruble was very stable, and its rate was kept due to a direct official appointment of value relative to the dollar. Today, when Russia is in a state of a market economy, the exchange rate is floating. The government has the opportunity to influence currency rates exclusively through the Central Bank, making various investments. It is important to understand that devaluation, whether open or hidden, depends on a variety of economic reasons and indicators, and the depreciation of the official currency is observed only when the appropriate decision of the state body or the government of the country. Devaluation is a change that occurs for various reasons, which can be briefly told. This may be a depreciation of the official currency in order to reduce the balance of payments deficit of the state, if there is some discrepancy between the money and the commodity mass, as well as the refusal to support the exchange rate, whose goal is to increase sales of its goods aimed at stimulating domestic production.

What is the devaluation of the ruble ?

Not so long ago, the ruble devaluation problem was very acute, as the whole world was in captivity crisis. If so, the devaluation, just like revaluation, occurs every day. What consequences can you expect from her? Among citizens, speech about devaluation comes only when it leaves the framework of normal fluctuation, leaving in a protracted peak, which greatly frightens very many.

For each economy during a crisis, devaluation is a kind of "button" of salvation, designed to raise the value of local producers, not only in the eyes of the population, but also of foreign partners. In case of consideration of the Russian situation, we can observe the following picture:

- Russians are too expensive to import goods, which forces them to proceed to the consumption of locally produced products;

- the foreign market receives Russian-made goods at a significantly lower cost, which significantly increases foreign interest in Russian-made goods.

In addition, in the conditions of distrust of the population towards the domestic economy, devaluation is the most effective way to significantly reduce the rate of squandering the gold reserve of our country.

There are also negative consequences in this situation. If the population will give extremely negative forecasts about the economic situation, this will cause the desire to buy up any currency, because confidence in the ruble will be undermined. In the most extreme case, the currency may disappear completely from the turnover, which will cause the disappearance of imported goods from the market. But if the situation does not go so far, the cost of imported goods will be much higher, and this will necessarily affect the level of life that Russians will have. Another possible consequence of the devaluation is an increase in the rate of inflation, as many domestic producers depend on the import of components and raw materials, which further complicates the life of the population. With all the aforementioned negative, experts nevertheless talk about the strength of the health effect of devaluation for the economy, which is the reason for its so frequent use.