Why would a floating currency become de-valued?
- From: "2.7182818284590..." <tangent1.57@xxxxxxxxx>
- Date: Fri, 18 Apr 2008 01:06:27 -0700 (PDT)
What's the purpose of devaluing a currency, and how is this mechanism
done for a floating currency (i.e. a currency floated on an open
market)? I realize that the Chinese don't allow their currency to
float. Why would a country's central bank want this to happen? I
would think to make it more difficult to import, and easier to
export. However, I noticed that even countries which don't export
much has done this. For example, India during the late '80s has done
this, and India is not really an export-driven economy. Another thing,
I do get the impression that the USD is being devalued to make it
easier for us to pay back external debt.
Finally, given that the currency is floated, wouldn't the fact that
it's floated nullify the devaluation?
.
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