<p>Revaluation, in the context of Forex, refers to an upward adjustment of a currency's official exchange rate. This means that the value of a currency increases relative to other currencies. It is the opposite of <a href="/NewSite/encyclopedia/devaluation/" class="ency-link">devaluation</a>, where a currency's value decreases.</p>

<h2>How It Works</h2>
<p>Revaluation can occur in several ways:</p>
<ul>
  <li><strong>Government Intervention:</strong> A government can intervene in the foreign exchange market by buying its own currency, thus increasing its demand and consequently, its value.</li>
  <li><strong>Economic Factors:</strong> Positive economic indicators, such as high GDP growth, low inflation, or a strong current account balance, can increase the demand for a currency, leading to revaluation.</li>
  <li><strong>Central Bank Policy:</strong> A central bank can increase interest rates, making investments in that currency more attractive, which can lead to revaluation.</li>
</ul>

<h2>Why It Matters</h2>
<p>Revaluation can have significant implications:</p>
<ul>
  <li><strong>Trade Balance:</strong> A revalued currency makes a country's exports more expensive and imports cheaper, which can lead to a deterioration in the trade balance.</li>
  <li><strong>Inflation:</strong> Revaluation can decrease inflation by making imports cheaper, reducing the cost of living.</li>
  <li><strong>Investment:</strong> A revalued currency can attract more foreign investment, as it increases the potential return on investments.</li>
</ul>
<p>However, excessive revaluation can also lead to a loss in competitiveness, making domestic products less attractive to foreign buyers.</p>