For the benefit of those of us who do not know much about economy.Can the Economists in the house enlighten us on naira devaluation, the implications and the ripple effects and why the president is reluctant in doing that.in a simple language pls.

Devaluation is a DELIBERATE reduction in the value of a country's currency in relation to the currencies of other countries. Devaluation is different from depreciation. Whereas devaluation is deliberate, depreciation of currency is caused by some macroeconomic factors.

However, Devaluation is used to discourage import and encourage export of goods and services across borders.

How do we achieve this? When a country's currency is devalued, foreign goods (imports) become so expensive because the value of the country's currency has been reduced making the value of the currency of her trading partner to go up. In this case, the foreign country will be enticed to import from Nigeria (for instance) and our hitherto importers will equally buy Nigerian made products because of high cost of foreign goods. This makes our balance of payment to become favourable.

In the long run (in future), the high rate of export from Nigeria and low import of foreign products by Alaba guys (lol) will increase the value of our naira.

2rutalk1:
Devaluation is a DELIBERATE reduction in the value of a country's currency in relation to the currencies of other countries. Devaluation is different from depreciation. Whereas devaluation is deliberate, depreciation of currency is caused by some macroeconomic factors.

However, Devaluation is used to discourage import and encourage export of goods and services across borders.

How do we achieve this? When a country's currency is devalued, foreign goods (imports) become so expensive because the value of the country's currency has been reduced making the value of the currency of her trading partner to go up. In this case, the foreign country will be enticed to import from Nigeria (for instance) and our hitherto importers will equally buy Nigerian made products because of high cost of foreign goods. This makes our balance of payment to become favourable.

In the long run (in future), the high rate of export from Nigeria and low import of foreign products by Alaba guys (lol) will increase the value of our naira.

it sounds positive but why is d president hesitant?

same question have been wanting to ask.

2rutalk1:
Devaluation is a DELIBERATE reduction in the value of a country's currency in relation to the currencies of other countries. Devaluation is different from depreciation. Whereas devaluation is deliberate, depreciation of currency is caused by some macroeconomic factors.

However, Devaluation is used to discourage import and encourage export of goods and services across borders.

How do we achieve this? When a country's currency is devalued, foreign goods (imports) become so expensive because the value of the country's currency has been reduced making the value of the currency of her trading partner to go up. In this case, the foreign country will be enticed to import from Nigeria (for instance) and our hitherto importers will equally buy Nigerian made products because of high cost of foreign goods. This makes our balance of payment to become favourable.

In the long run (in future), the high rate of export from Nigeria and low import of foreign products by Alaba guys (lol) will increase the value of our naira.

The currency needs to depreciate now because the forex inflow has reduced drastically. It is because the government has refused to allow it depreciate at the official market as led to its massive depreciation at the black market.

Devaluation will cripple Nigerias economy at this point in time, the rate of inflation will go balistic considering that we are import dependent

2rutalk1:

In the long run (in future), the high rate of export from Nigeria and low import of foreign products by Alaba guys (lol) will increase the value of our naira.

The problem here is we dont have many competitive products to export now!
we have not been able to do import substitution not to talk of good exports

@d one who explained devaluation:Do u knw what happened to Zimbabwe after their currency was devalued?

Emmeritus:
@d one who explained devaluation:Do u knw what happened to Zimbabwe after their currency was devalued?

pls tell us more about dat.

Ama80:
it sounds positive but why is d president hesitant?

In summary it means the official exchange rate will go higher to like 230 to $1. This will affect the price of products that are eligible for cbn official rate. Eg petrol

Ama80:
it sounds positive but why is d president hesitant?

The President is hesitant because our economy may not actually reap the benefits of devaluation for now because we are import dependent economy - we have little or nothing to export to other countries. Therefore, even if our currency is devalued and import is discouraged as it is always the case, can our importers source the products locally? This will worsen the situation. What we need to do now is to diversify our economy, make the business/macroeconomic environment conducive, and ultimately, pursue import substitution strategy of industrialization. Import substitution strategy is a situation whereby goods and services that are hitherto imported from foreign countries are manufactured locally.

Emmeritus:
@d one who explained devaluation:Do u knw what happened to Zimbabwe after their currency was devalued?

It happened to Zibabwe because their economy is not ripe for devaluation. Any country that has little or no products and services for export has no business devaluing her currency.

Educating, I never support Devalulating Our Naira.

Lalasticlala will never consider dis topic fp worthy bcs it tends to enlighten.it's only political vituperations dat see fp.

Breaking News: APC in Akwa Ibom rejects supreme court verdict for announcing PDP's Udom Emmanuel winner and heads
straight to The basket ball court..
Source: Lai Mohammed..

Google is your friend

It's another unfavourable gimmick that makes the naira weaker than it already is

it is the act of devaluing naira

Hmmmm

Question: What is devaluation of Naira?
Answer: The result of his excellency trying to make N1 = $1

Everyone is talking about diversifying the economy yet no one is taking action....

Even when government approve funds for agricultural purposes, it will be by "man-know-man" basis to get the funds and the funds will even be diverted for other uses...

Which way Nigeria

The Naira was devalued less than 2 years ago and we all saw the negative result, what makes people think it would work now?

@2rutalk1 in other words, does devaluation of a currency mean the purchasing power of that currency is lower in relation to the currency of another country due to lack of or non existing exporting activities?

Ok

Jesus has come finish ooo

When threads like these start popping up, then devaluation is inevitable

Ama80:
it sounds positive but why is d president hesitant?

Because devaluation will never work in a country that is corrupt. Nigeria needs to tackle corruption first before any meaningful economic objective can be achieved.

Ama80:
it sounds positive but why is d president hesitant?

because he doesn't understand economics. he's a cattle rearer by profession.

Hmm.. I'm learning

In other words, devaluation of naira is booming yahoo boys business #fact#

2rutalk1:
Devaluation is a DELIBERATE reduction in the value of a country's currency in relation to the currencies of other countries. Devaluation is different from depreciation. Whereas devaluation is deliberate, depreciation of currency is caused by some macroeconomic factors.

However, Devaluation is used to discourage import and encourage export of goods and services across borders.

How do we achieve this? When a country's currency is devalued, foreign goods (imports) become so expensive because the value of the country's currency has been reduced making the value of the currency of her trading partner to go up. In this case, the foreign country will be enticed to import from Nigeria (for instance) and our hitherto importers will equally buy Nigerian made products because of high cost of foreign goods. This makes our balance of payment to become favourable.

In the long run (in future), the high rate of export from Nigeria and low import of foreign products by Alaba guys (lol) will increase the value of our naira.

I guess this explains why google says exchange rate of dollars to naira is 198, CU's I have been wondering how come its 300+ here and google saying 198.