how can a rise in inflation decrease the country debt value?

Question

Title

In: 1

Answer 1

This is true if your debt is in the currency that is inflating. If you’re the USA and the US dollar inflates, your debt effectively goes down.

But a lot of countries have to borrow in other currencies. Nobody wants to be repaid in Turkish lira. If your country’s debt is in foreign currencies, *your* currency inflating won’t help. If you owe €10 billion, whether thats 50 billion in your currency or 500 doesn’t make a difference.