₦airaland Forum

Tpave:
But how was Goodluck able to maintain the value of naira against the dollar fluctuating between #150 and #180 for almost 6 years? Just asking though.

Tpave:
But how was Goodluck able to maintain the value of naira against the dollar fluctuating between #150 and #180 for almost 6 years? Just asking though.

Leovido:
The exchange rate is one of the most important determinants of a country's relative level of economic health. Here we’ll look at the main factors influencing exchange rates.

1) INFLATION:
A country with a low level of inflation experiences higher value for their currency and better purchasing power fir it's citizens, compared to other countries. It is vise-versa for a country with higher inflation

2) INTEREST RATES:
Central Banks exerts power on interest rates via manipulation of Inflation and exchange rate. Higher interest rates brings lenders higher returns. The impact of higher interest rates may however be reduce or down played if the inflation rate is higher than other countries or if other factors is affecting their currency negatively.

3) CURRENT-ACCOUNT DEFICITS:
The current account is the balance of trade between a country and its trading partners, reflecting all payments between countries for goods, services, interest and dividends. A deficit in the current account shows a country is importing goods and services more than it is exporting them. The country will then typically borrow capital from foreign sources to make up the deficit, causing its currency to depreciate relative to its trading partner.

4) PUBIC DEBT:
Countries will engage in large-scale deficit financing to pay for public sector projects using governmental funding. While such activity stimulates the domestic economy, nations with large public deficits and debts are less attractive to foreign investors. This is because a large debt encourages more inflation, and higher inflation translates into lower currency value.

5) TERMS OF TRADE:
A country's terms of trade is a ratio comparing export prices to import prices. If the price of a country's exports rises by a greater rate than that of its imports, its terms of trade have favorably improved, which tends to show currency appreciation. However, if the price of a country's imports rises more than the rate of exports, their currency's value will decrease in relation to trading partners.

6) POLITICAL INSTABILITY AND ECONOMIC PERFORMANCE:
Foreign investors inevitably seek out stable countries with strong economic performance in which to invest their capital. Political turmoil, for example, can cause a loss of confidence in a currency, and a movement of capital to the currencies of more stable countries.

CULLED FROM: Investopedia.com

I believe these factors will aid us in knowing what went wrong with our economy and drawing the blueprints of the needed solutions.
I personally have been busy with my drawing board sketching the solutions

IamDelilah: