Devaluation under Pressure

Devaluation under Pressure

India, Indonesia, and Ghana

By David Denoon





Devaluation Under Pressure illustrates the options open to a developing country's political leaders when faced with a balance of payments crisis. It focuses on the practical problems that policymakers have in planning and implementing a currency devaluation and is based not only on the usual secondary works but also on interviews with some of the policymakers involved and on primary, classified documents. The book presents unique historical information about decision-making in India, Indonesia, and Ghana. The chapter on India, for example, summarizes the Woods-Mehta Agreement which committed the Indian Government to major policy changes that were not implemented. The precise text of this agreement is still being closely held. And the Ghana chapter includes correspondence between the author and former Prime Minister Busia who was able to review the material and provided his perspective on the devaluation and the subsequent coup which overthrew him. Although the current international financial regime is called a flexible exchange rate system, virtually all less-developed countries peg their currencies to one of the major reserve currencies and must be ready to adapt to the short-term and long-term oscillations of that currency. So the question of devaluation is a pressing issue. Also, devaluations are frequently one part of a package of policy measures that LDCs must implement in order to qualify for resources from the International Monetary Fund, private banks, and various aid donors. The three case studies of currency devaluation decisions presented here represent historically significant examples of such devaluations under pressure. The similarities and differences of the same economic policy choice in India (1966), Indonesia (1970), and Ghana (1971) have enabled the author to generalize about what drives a country to devalue its currency, the determinants of a devaluation's success, and what the critical stages are in the devaluation process.


Out of Print ISBN: 9780262040839 272 pp. | 6 in x 9 in


$35.00 X | £28.00 ISBN: 9780262541565 272 pp. | 6 in x 9 in


  • This should be required reading for economists giving policy advice in developing countries. Denoon provides a nuanced analysis of technical issues set in political and bureaucratic contexts which illuminate the feasible policy options.

    John Harris

    Director and Professor of Economics, Boston University

  • Devaluation Under Pressure is the best analysis I have read of how regimes might attempt to reduce the political costs of devaluation while gaining the benefits of economic stabilization. The case studies are excellent. The conclusions are sensible and insightful. This is an important contribution to the literature on the political economy of development.

    Myron Weiner

    Ford International Professor of Political Science, MIT