I've got a question for the economist and investment bankers in the house.

As reported in the news recently, there's indication that Nigeria Government cum CBN might devalue the Naira based on IMF recommendation. I'll like to know the effect(s) of this on foreign exchange.

In a lay man terms, Could it be safer now to have money converted to dollars/pounds and then back to Naira after devaluation or leave it as it is in Naira.

Can we have some intelligent analysis of this subject please.

Cheers!

Reserve for coment

Book for explanation.

Devaluation can go either way. In the short term speculation on dollar will fall but rise in long term where no increased fdi and weak industrialization

journerman:
I've got a question for the economist and investment bankers in the house.

As reported in the news recently, there's indication that Nigeria Government cum CBN might devalue the Naira based on IMF recommendation. I'll like to know the effect(s) of this on foreign exchange.

In a lay man terms, Could it be safer now to have money converted to dollars/pounds and then back to Naira after devaluation or leave it as it is in Naira.

Can we have some intelligent analysis of this subject please.

Cheers!

If your aim is to secure the Naira value, it pays to buy dollar now and sell it back after the devaluation subject to any charges involved in the buying and selling. If there no charges, it will pay to buy dollars
That is one of the problems in the Nigerian financial system, there is no instruments for forex management like fx swaps, fx options, forward contracts. There are no financial engineers in Nigeria and the legislation is too slow

From a lay man point of view, it would make sense if you buy $$ and sell after devaluation. But how sure are we that naira will be devalued?

donsteady:
From a lay man point of view, it would make sense if you buy $$ and sell after devaluation. But how sure are we that naira will be devalued?

Even if Naira is not officially devalued, it gets depreciated/devalued slowly by the forces of demand and supply, as long as the demand for the dollar continues to increase relative to decreasing oil price, foreign reserves and foreign direct investment, you will be better off buying dollar now