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Question -

What do you understand by devaluation of rupee?



Answer -

Devaluation is reduction in the value of the currency in comparison to a foreign currency under Fixed Rate System. Devaluation is done by the government in order to encourage more exports and reduce imports. After the devaluation, the value of rupee is reduced with respect to the foreign currency and more amount of goods can be purchased using one unit of that foreign currency.

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