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BasicEconomics1 min

Devaluation is a fall in the value of the national currency against foreign currencies: the hryvnia gets cheaper, and the dollar or the euro costs more hryvnia.

In plain words

Strictly speaking, devaluation means an official cut in the exchange rate under a fixed-rate regime. When the market sets the rate, people speak of the currency weakening (depreciating), although in everyday speech that is “devaluation” too. For the economy it means dearer imports and foreign-currency debts; for you, goods whose prices depend on the dollar get more expensive, while savings held in foreign currency grow when counted in hryvnia. A sharp depreciation usually pushes inflation up.

Example. The rate moves from 40 to 44 hryvnia per dollar (illustrative): the dollar is 10% dearer, while the hryvnia has lost about 9% against the dollar.

Related terms

← The whole glossary

Word of the dayInflationBasic

Inflation is a sustained rise in the general level of prices, so that money buys fewer goods and services than before.

Example. Prices rose 10% over the year and your deposit earned 8%: formally you earned something, but you can buy a little less with that money than last year (108 against 110, illustrative numbers).

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