Revaluation of Currency Accounts

Revaluation of Currency Accounts

A financial adjustment made to the value of a country's currency relative to other currencies. It involves altering the exchange rate of a currency to reflect its current value in the foreign exchange market.

Revaluation can occur in both fixed and floating exchange rate systems. In a fixed exchange rate system, where the value of a currency is pegged to another currency or a fixed standard like gold, revaluation involves a deliberate change in the official exchange rate. This can be done by the central bank or the government to adjust the currency's value and correct any imbalances in the economy.

In a floating exchange rate system, where the currency's value is determined by market forces, revaluation occurs when the value of a currency increases against other currencies due to factors such as economic growth, increased demand for exports, or changes in market sentiment. This change in value can have various implications for trade, investment, and the overall economy.