Why might a country choose to devalue its currency?

to encourage export

Explanation:

Devaluation is the term used to describe the official reduction in the value of a country's currency compared to other currency.

Currency devaluation is always at the descretion of the currency regulatory body in a country. One of the reason for currency devaluation is to encourage export which helps to bring down trade deficit.

When a country notices trade imbalance, devaluation comes into play. The cost of exporting goods becomes lower when a country's currency is devalued hence cost of importing becomes higher. Consumers will not be able to purchase imported goods due to its high cost thereby improving local businesses.

When a country's export is greater than its import, then there would be a reduction in trade deficit as a result of better balance of payment, thereby making the country's export more competitive in the global market.

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