Originally, the term referred to an official decision to lower a fixed exchange rate. Under floating exchange rates, devaluation describes any significant weakening of a national currency occurring due to market forces.
The causes vary: deterioration in foreign trade conditions, capital outflows, divergence between domestic and foreign inflation, changes in monetary policy. A special case is the transition from administratively maintained rates to market rates, when accumulated discrepancies are realized sharply and suddenly. This is what happened in Uzbekistan during currency market liberalization in 2017.
The consequences differ for various participants. Exporters benefit: their foreign currency revenues increase when converted to the national currency. Importers and companies with foreign currency debt lose. For the population, weakening means higher prices for imported goods and depreciation of national currency savings in foreign currency terms.
For an investor, the practical takeaway is: a high interest rate on national currency deposits or bonds includes compensation for exchange rate risk. Comparing national currency and foreign currency returns makes sense only when accounting for expected exchange rate changes, not based on nominal interest rate values.