Home PYQs UPPSC UPPSC MCQs Prelims 1998 (GS Paper I)

Question

Devaluation of currency means:

  1. Reduction in the value of a currency vis-a-vis major internationally traded currencies
  2. Permitting a currency to seek its worth in the international market
  3. Fixing the value of currency with the help of IMF and WB
  4. None of the above

Answer:

Option A: Reduction in the value of a currency vis-a-vis major internationally traded currencies

Detailed Solution:

The correct answer is “Reduction in the value of a currency vis-a-vis major internationally traded currencies”.

Devaluation of currency specifically refers to the deliberate reduction in the value of a country's currency relative to other major internationally traded currencies. This action is usually taken by a government or central bank and is a monetary policy tool used to address trade imbalances, improve export competitiveness, or respond to other economic factors.