what is the difference between devaluation and depreciation 
devaluation occurs when a government changes the fixed exchange rate of its currency most currencies traded on foreign exchange markets are not pegged to another currency and the market determines their value with floating exchange rates if the demand for one currency changes relative to another due to market forces and loses value it is called depreciation the bottom linedevaluation occurs when a country creates a downward adjustment of its currency value to balance trade devaluing a currency reduces the cost of a country s exports and makes imports less attractive as exports increase and imports decrease there is typically a better balance of payments as the trade deficit shrinks 