Cause and effect of some CBN policies.
Positive effects of currency devaluation or floating the currency:

1. Boost to exports: Devaluing a currency can make exports cheaper for foreign buyers, leading to an increase in demand for goods and services produced in the devaluing country.

2. Increase in tourism: A weaker currency can make a country more attractive to international tourists due to cheaper goods and services.

3. Reduction of trade deficit: By making exports cheaper and imports more expensive, currency devaluation can help reduce a country's trade deficit. But Nigeria is an import dependent country so it back fired.

Negative effects of currency devaluation:

1. Inflation: Devaluing a currency can lead to higher inflation as imported goods become more expensive, reducing purchasing power for consumers.

2. Decrease in purchasing power: A weaker currency can reduce the purchasing power of consumers, leading to lower standards of living.

3. Debt burden: If a country has a large amount of foreign debt, devaluing the currency can make it more expensive to repay, leading to a higher debt burden.

Discontinuation of ways and means by central banks:

Positive effects:

1. Increase in transparency: Central banks will have to rely on more conventional tools to manage monetary policy, leading to greater transparency and accountability.

2. Reducing risk-taking behavior: Discontinuing ways and means can reduce the risk-taking behavior of central banks and prevent them from excessively printing money.

Negative effects:

1. Limited flexibility: Central banks may have a reduced ability to respond to economic shocks and financial crises without the use of ways and means.

2. Potential increase in interest rates: Without ways and means, central banks may have to rely more on increasing interest rates to control the money supply, which can have negative effects on economic growth.

Increase in lending rate:

Positive effects:

1. Control inflation: Higher lending rates can help control inflation by reducing consumer spending and investment, thereby slowing down demand-driven price increases.

2. Encourage savings: Higher lending rates can encourage individuals to save more money as the returns on savings accounts and other investments increase.

Negative effects:

1. Slow economic growth: An increase in lending rates can slow down economic growth by making it more expensive for businesses and individuals to borrow money for investments and purchases.

2. Increase in borrowing costs: Higher lending rates can increase borrowing costs for businesses and individuals, making it harder to access credit and finance new projects.

Truth be told, Nigerians are yet to see nor feel any positive impact of CBN financial and economic policies since Tinubu came to power. Anything else you people are writing here is just a mere academic excise and of no value to the people in the street. If you doubt it, go to any newspaper stand near you and bring this topic for discussion.


I left..!