Correct Option
Assertion (A) states that devaluation of a currency may promote export. Devaluation is the deliberate downward adjustment of a country's currency value relative to other currencies, typically in a fixed or semi-fixed exchange rate regime. When a currency is devalued, the country's goods and services become cheaper for foreign buyers in terms of their own currency. This increased affordability enhances the competitiveness of domestic products in international markets, potentially leading to a rise in exports. Therefore, Assertion (A) is true.
Reason (R) states that the price of the country's products in the international market may fall due to devaluation. Following a devaluation, a unit of foreign currency can purchase more units of the devalued domestic currency. This directly translates to a lower price for the exporting country's products when they are priced in foreign currencies. Therefore, Reason (R) is true.
Reason (R) provides the fundamental economic mechanism explaining why devaluation promotes exports. The reduction in the international price of a country's products makes them more attractive and affordable to foreign consumers, stimulating demand and thereby increasing the volume of exports. Hence, Reason (R) is the correct explanation of Assertion (A).
Incorrect Options
Option 2 is incorrect because Reason (R) precisely explains the causal link between currency devaluation and the promotion of exports, making it a correct explanation for Assertion (A).
Option 3 is incorrect because Reason (R) is a factually accurate statement describing the immediate impact of currency devaluation on the international pricing of a country's goods.
Option 4 is incorrect because Assertion (A) correctly identifies a potential positive outcome of currency devaluation on a country's export performance.