12 Pros And Cons Of Devaluation of Currency

Pros: 1. Exports become cheaper and more competitive to foreign buyers.  2. Higher level of exports should lead to an improvement in the current account deficit. 3. It will make balance of payment favourable if that export increases and import decreases. 4. Higher exports can lead to higher rates of economic growth. 5. Devaluation is a less damaging way to restore competitiveness than ‘internal devaluation’.  6. It can also increase the domestic employment. Cons: 1. It is likely to cause inflation. 2. Reduces the purchasing power of citizens abroad. 3. A large and rapid devaluation may scare off international investors.