Devaluation means the reduction of the value of a country’s currency in terms of the value of the currencies of other nations of the world. The effects of devaluation are:
Exports Become Cheaper- The prices of goods produced locally would fall in other countries because people from other countries would use lesser amount in buying goods from such countries that devalued.
Import Becomes Much More Expensive- Citizens from a country that devalued her currency would spend more in buying goods from other countries(JP MORGAN HATE NIGERIANS WALAHI). Increase In Exports in a country that devalued its currency would increase because they are cheaper.
Reduction In Imports-The quantity of goods and services that would be imported into a country that devalued its currency would reduce because they are more expensive in terms of buying them due to low purchasing power.
Improvement in the Balance of Payments-This is as a result of increase in quantity of goods exported and reduction in imports which leads to saving foreign exchange for the country. Nigeria at this time could not afford to devalue her currency because the country is not producing a product that would attract buyers from other countries. The little quantity of goods we are exporting apart from crude are in raw-materials which would later be transformed by the developed world and sent back to us as imported goods with higher value (prices).
Naira devaluation at this period will not help the economy; CBN's devaluation over the past decade and particularly under GEJ did not help the Nigerian economy. Only the Capital market and Foreign Speculators have benefited(LET THE STOCK MARKET CONTINUE TO CRASH; THEY MAKE PROFIT WITHOUT PROSPERITY FOR ALL). The Nigerian Government and the management of the apex bank should be careful not to allow IMF control the monetary policies of our economy (I am pleased PMB's approach has solidified the resolve of the CBN, DMO and the Ministry of Finance in their attempt to stabilize the value of the Naira. JP Morgan, working in alliance with the World Bank and IMF made similar suggestion during the administration of Ibrahim Babangida (IBB), and the outcome was a disaster for Nigeria; eroding the rebuilding PMB started in the 1980's .
The idea brought about a huge damage with negative consequences to the country and up till now, the economy has not fully recovered from that policy. CBN should focus more on the reforms that will enhance economic growth within the short, medium and long term expectations. This will boost industrial growth in order to address the problem of unemployment in the economy.
PMB is Right on Track....Slowly, But Steadily...#2BeContinued
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