Basically, a currency of a country is stated as devalued when it loses its monetary worth in comparison to other currencies in the foreign exchange market. A currency's devaluation is the result of a countries monetary policies and guidelines.
Understand it with a short example:
A central bank can make the conscious effort to make its currency less valuable. If Country XYZ's currency is set at a fixed exchange rate of 2:1 to the USD and, because of a weak economy, XYZ cannot afford to pay the interest rate on its debt outstanding, XYZ may devalue their currency. This means the central bank of XYZ will declare their fixed exchange rate to be 10:1 to the U.S. dollar.
Which makes the debt outstanding worth five times less. It's a very tricky maneuver with grave economic consequences.
"HOPE IT WAS INFORMATIVE"
