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Currency Devaluation HO

Currency devaluation is a government policy that intentionally lowers a currency's value to achieve economic goals, such as boosting exports and managing debt. While it can lead to benefits like increased remittances and tourism, it also causes negative effects, including inflation, income inequality, and reduced healthcare access. Mitigation strategies include economic diversification, social safety nets, and proactive monetary policies to stabilize the economy during crises.

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13 views2 pages

Currency Devaluation HO

Currency devaluation is a government policy that intentionally lowers a currency's value to achieve economic goals, such as boosting exports and managing debt. While it can lead to benefits like increased remittances and tourism, it also causes negative effects, including inflation, income inequality, and reduced healthcare access. Mitigation strategies include economic diversification, social safety nets, and proactive monetary policies to stabilize the economy during crises.

Uploaded by

Alicia ROMUROS
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Currency Devaluation

Currency devaluation, the deliberate reduction of a currency's value by a government, has


significant social hazards that intersect with public health and disaster preparedness. This occurs
when a government intentionally lowers its currency's value relative to other currencies to
achieve economic objectives like boosting exports or reducing trade deficits. Unlike depreciation
(market-driven decline), devaluation is a policy tool.

Causes of Devaluation

Governments devalue currencies to:

1. Boost exports by making goods cheaper internationally.


2. Reduce trade deficits by discouraging expensive imports.
3. Manage sovereign debt by lowering real debt burdens.
4. Stimulate tourism through cheaper travel costs.

Effects of Devaluation
Negative Effects:
1. Inflation and Cost of Living
o Imported goods (e.g., medicines, fuel) become costlier, disproportionately
affecting low-income households.
2. Income Inequality
o Fixed-income earners (e.g., nurses, teachers) face eroded purchasing power, while
exporters and foreign-currency earners benefit.
3. Healthcare Access
o Higher drug prices and reduced public health funding may limit access to care,
worsening outcomes during disasters.

Positive Effects:
1. Remittance Growth
o Overseas Filipino workers (OFWs) sending money home benefit from stronger
foreign currencies.
2. Tourism and Export Jobs
o Cheaper local costs attract tourists, creating jobs in hospitality and manufacturing.

Examples

 International: China’s periodic yuan devaluations to support manufacturing exports.


 Local (Hypothetical): If the Philippines devalues the peso, OFW remittances could rise,
but low-income families might struggle with inflated food and medicine prices.
Prevention and Mitigation
1. Economic Diversification
o Reducing reliance on imports (e.g., local pharmaceutical production) stabilizes
prices during crises.
2. Social Safety Nets
o Subsidies for essentials (e.g., rice, insulin) protect vulnerable groups.
3. Disaster Nursing Interventions
o Nurses can advocate for equitable resource distribution during shortages and
provide mental health support in economically strained communities.
4. Monetary Policy Guardrails
o Central banks can maintain currency reserves to avoid abrupt devaluation.

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