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Why Buhari Should Not Devalue The Naira - Politics - Nairaland

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I Was Overthrown In 1984 For Refusing To Devalue The Naira – Buhari / I Won’t Devalue Naira, Buhari Insists / CBN Has No Option But To Devalue The Naira – S&P (2) (3) (4)

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Why Buhari Should Not Devalue The Naira by saasala(m): 7:58pm On Feb 03, 2016
So, I saw a post on frontpage page on how Prof. Pat Utomi attacked the president for not agreeing to devalue the Naira. I have not much knowledge on economics as I am not schooled(Never been to the inside of an higher institution, I even failed my WAEC), so I decided to search the net to know the benefits/demerits of currency devaluation and this is what I found below:

BREAKING DOWN 'Devaluation'

Devaluating a currency is decided by the government issuing the currency, and unlike depreciation, is not the result of non-governmental activities. One reason a country may devaluate its currency is to combat trade imbalances. Devaluation causes a country's exports to become less expensive, making them more competitive on the global market. This in turn means that imports are more expensive, making domestic consumers less likely to purchase them.

While devaluating a currency can seem like an attractive option, it can have negative consequences. By making imports more expensive, it protects domestic industries who may then become less efficient without the pressure of competition. Higher exports relative to imports can also increase aggregate demand, which can lead to inflation.

Read more: Devaluation Definition | Investopedia http://www.investopedia.com/terms/d/devaluation.asp#ixzz3z8GSBj6m

Now, going by the above explanations, devaluing the Naira will only spell doom for Nigeria as virtually everything we use is imported. I mean, things are going to be freaking costly, and inflation will be inevitable. Devaluation at this point can only be benefitial if we are major exporters and sadly we are not.

Or is there something I am not understanding. Please I need more knowledgeable people in the house to enlighten me us

2 Likes 1 Share

Re: Why Buhari Should Not Devalue The Naira by skup008(m): 8:02pm On Feb 03, 2016
ok
Re: Why Buhari Should Not Devalue The Naira by sirjohnson(m): 8:10pm On Feb 03, 2016
Lalasticlala I wish to learn too.
Re: Why Buhari Should Not Devalue The Naira by Elosky20: 8:15pm On Feb 03, 2016
ok
Re: Why Buhari Should Not Devalue The Naira by vikacydevato(m): 8:19pm On Feb 03, 2016
That is why they now bargain 3,500 per. Snail, for my snails in Europe.
Re: Why Buhari Should Not Devalue The Naira by Atlantian: 8:22pm On Feb 03, 2016
I advise you not to sound a conviction on something you know nothing about. You are telling us Buhari should not devalue the currency, yet you end up my asking us to enlighten you on the entire devaluation issue.

The value of a currency is dependent on the demand and supply of that currency. The price of oil which is our major export is now on the region of $30pb against $120pb that it was about a year ago. Simple maths indicate that 30 is 0.25 percent or 1/4 of 120. So as at 1 year ago, naira was 190 to 1$. So common sense shows that value of naira at this moment is supposed to be theoretically 4 x 190 = 760 naira to a dollar, but based on the fact that fx rate is not determined by just crude sales but affected by marginal fluctuation differences in fx as well as other indices, we are currenctly exchanging at about 300 to a dollar in the parallel market, which I believe is the true market.

Devaluing our currency is bad, yes it sounds very bad and it is, but that is the price you pay for a Federal Government that depends on Niger Delta crude oil alone. The FG bars exploration of solid minerals by the states since 1960 and so, they operate a quasi mono-product economy yet expects miracles from heaven.

We are doomed my friend, because you even need lots of money to develop new frontiers, the money we do not have. And yet we borrow to pay salaries. The debt will become so huge that we will basically default and our external reserve will be fleeced. That is when we will not be able to buy arms to fight boko haram, or import basic necessities like food and drugs.

Again, we are doomed, except the silly politicians at Aso Rock go on a viral campaign of mandating States to engage in Private Sector JV to explore revenue options like allowing states to run their local economies, explore their minerals. Fiscal independence of states is all that Nigeria needs. When there is no more such much money controlled by the FG. There is will be less to be stolen there and everyone will love to live and work in his/her state.

I am in Lagos because Federal Government chose to operate commercial seaports and airports here alone. All oil companies are here and I virtually see myself leaving my paradaisical state to live in a noisy, chaotic place. Everything is just wrong. There is no perfect place where madness meets with ignorance like this country.

1. Allow states to access their resources and pay royalties and taxes to FG.
2. Allow State to own their police
3. Allow State to design their tax codes.
4. Allow states to merge if they chose to.

5 Likes 1 Share

Re: Why Buhari Should Not Devalue The Naira by saasala(m): 8:33pm On Feb 03, 2016
Atlantian:
I advise you not to sound a conviction on something you know nothing about. You are telling us Buhari should not devalue the currency, yet you end up my asking us to enlighten you on the entire devaluation issue.

The value of a currency is dependent on the demand and supply of that currency. The price of oil which is our major export is now on the region of $30pb against $120pb that it was about a year ago. Simple maths indicate that 30 is 0.25 percent or 1/4 of 120. So as at 1 year ago, naira was 190 to 1$. So common sense shows that value of naira at this moment is supposed to be theoretically 4 x 190 = 760 naira to a dollar, but based on the fact that fx rate is not determined by just crude sales but affected by marginal fluctuation differences in fx as well as other indices, we are currenctly exchanging at about 300 to a dollar in the parallel market, which I believe is the true market.

Devaluing our currency is bad, yes it sounds very bad and it is, but that is the price you pay for a Federal Government that depends on Niger Delta crude oil alone. The FG bars exploration of solid minerals by the states since 1960 and so, they operate a quasi mono-product economy yet expects miracles from heaven.

We are doomed my friend, because you even need lots of money to develop new frontiers, the money we do not have. And yet we borrow to pay salaries. The debt will become so huge that we will basically default and our external reserve will be fleeced. That is when we will not be able to buy arms to fight boko haram, or import basic necessities like food and drugs.

Again, we are doomed, except the silly politicians at Aso Rock go on a viral campaign of mandating States to engage in Private Sector JV to explore revenue options like allowing states to run their local economies, explore their minerals. Fiscal independence of states is all that Nigeria needs. When there is no more such much money controlled by the FG. There is will be less to be stolen there and everyone will love to live and work in his/her state.

I am in Lagos because Federal Government chose to operate commercial seaports and airports here alone. All oil companies are here and I virtually see myself leaving my paradaisical state to live in a noisy, chaotic place. Everything is just wrong. There is no perfect place where madness meets with ignorance like this country.

1. Allow states to access their resources and pay royalties and taxes to FG.
2. Allow State to own their police
3. Allow State to design their tax codes.
4. Allow states to merge if they chose to.


Oops! Its long. Will come back to read after Chelsea match. Thanks for drumming your ideas
Re: Why Buhari Should Not Devalue The Naira by Atlantian: 8:36pm On Feb 03, 2016
saasala:


Oops! Its long. Will come back to read after Chelsea match. Thanks for drumming your ideas
Most people who have no patience of reading essays are usually timid.

1 Like

Re: Why Buhari Should Not Devalue The Naira by Flashh: 8:44pm On Feb 03, 2016
saasala:


Oops! Its long. Will come back to read after Chelsea match. Thanks for drumming your ideas
And you had to quote the whole post for the nonsense you just typed?

2 Likes

Re: Why Buhari Should Not Devalue The Naira by xpac01(m): 9:05pm On Feb 03, 2016
Atlantian:
I advise you not to sound a conviction on something you know nothing about. You are telling us Buhari should not devalue the currency, yet you end up my asking us to enlighten you on the entire devaluation issue.

The value of a currency is dependent on the demand and supply of that currency. The price of oil which is our major export is now on the region of $30pb against $120pb that it was about a year ago. Simple maths indicate that 30 is 0.25 percent or 1/4 of 120. So as at 1 year ago, naira was 190 to 1$. So common sense shows that value of naira at this moment is supposed to be theoretically 4 x 190 = 760 naira to a dollar, but based on the fact that fx rate is not determined by just crude sales but affected by marginal fluctuation differences in fx as well as other indices, we are currenctly exchanging at about 300 to a dollar in the parallel market, which I believe is the true market.

Devaluing our currency is bad, yes it sounds very bad and it is, but that is the price you pay for a Federal Government that depends on Niger Delta crude oil alone. The FG bars exploration of solid minerals by the states since 1960 and so, they operate a quasi mono-product economy yet expects miracles from heaven.

We are doomed my friend, because you even need lots of money to develop new frontiers, the money we do not have. And yet we borrow to pay salaries. The debt will become so huge that we will basically default and our external reserve will be fleeced. That is when we will not be able to buy arms to fight boko haram, or import basic necessities like food and drugs.

Again, we are doomed, except the silly politicians at Aso Rock go on a viral campaign of mandating States to engage in Private Sector JV to explore revenue options like allowing states to run their local economies, explore their minerals. Fiscal independence of states is all that Nigeria needs. When there is no more such much money controlled by the FG. There is will be less to be stolen there and everyone will love to live and work in his/her state.

I am in Lagos because Federal Government chose to operate commercial seaports and airports here alone. All oil companies are here and I virtually see myself leaving my paradaisical state to live in a noisy, chaotic place. Everything is just wrong. There is no perfect place where madness meets with ignorance like this country.

1. Allow states to access their resources and pay royalties and taxes to FG.
2. Allow State to own their police
3. Allow State to design their tax codes.
4. Allow states to merge if they chose to.

Brother did you just type this or you've typed for a long time expecting to paste against this kind of topic
Well I must say you struck very vital points at areas that need urgent attentions from the FG to the state government aswell as other sectors.
But me I still have strong agree with Buhari's resistance to naira devaluation. Believe me with the motions being set by the Bank Of Industries, CBN, and others in trying to develop and harness our mineral and human resources, I am sure the Federal Government has plans up their sleeves to set a junction where the resisted naira devaluation meets with a export ready industries all round the country. I think we need the feel the pressure of a weak naira a bit much in other to motivate us to go into breaking and dusting up our solid mineral and human resources than for us to weaken naira just to encourage importation. This will even help by bringing more positive impact on our GDP.
Re: Why Buhari Should Not Devalue The Naira by TippyTop(m): 9:07pm On Feb 03, 2016
Atlantian killed it with above article, nothing more to add.
Re: Why Buhari Should Not Devalue The Naira by saasala(m): 11:43pm On Feb 03, 2016
Atlantian, I am back from the match.

Thanks for this wonderful and indeptly explanatory piece of masterpiece. I cannot agree with you more on this. Again, I say thank you.
Re: Why Buhari Should Not Devalue The Naira by saasala(m): 11:45pm On Feb 03, 2016
Atlantian:
Most people who have no patience of reading essays are usually timid.

You obviously misunderstood me. I said I will come back to read after the match. I am not a lazy reader, okay?

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