For a country with a pegged exchange rate regime devaluation is an officially announced lowering in the value of the domestic currency relative to foreign currencies, usually as a means of correcting balance of payment deficit, at least temporarily. Devaluation and currency depreciation are similar: devaluation is used for a discrete change in the exchange rate brought about as a matter of policy, whereas depreciation occurs gradually through the working of the foreign exchange markets. Devaluation makes exports cheaper abroad in terms of foreign currency, and imports dearer at home in terms of home currency, and thus tends to improve the balance of trade but at the cost of increased import prices. See also competitive devaluation.