Under the fixed exchange rate regime, if the government of a country finds its currency to be overvalued and therefore deliberately reduces the value of its current against the foreign currency, it will be called as?

Option 1 -> Depreciation refers to a decrease in currency value in a floating exchange rate system due to market forces, not deliberate government action.

Option 2 -> Appreciation means an increase in currency value, which is the opposite of what is described in the question.

Option 3 -> Devaluation is the deliberate, official reduction of a currency's value by the government under a fixed exchange rate regime.

Option 4 -> Revaluation is the deliberate, official increase in a currency's value under a fixed exchange rate regime, which is the opposite action.

Hence, Option 3: Devaluation of domestic currency -> Under a fixed exchange rate regime, when a government deliberately reduces the official value of its currency against foreign currencies, it is called devaluation. This is distinct from depreciation, which occurs in floating exchange rate systems through market forces. Devaluation is a policy tool used to correct overvaluation, improve export competitiveness, and address balance of payments issues. The key identifiers here are 'fixed exchange rate regime' and 'deliberately reduces', which specifically point to devaluation as a government-initiated action. -> correct