CURRENCY DEVALUATION, What Some People Do Not Know: When an image maker have no clue on Intl Trade, Economic Policies and Inflation Paramedics, he makes statements like One of the major attractions of Major General Muhammadu Buhari was the refusal to bow to pressures from the IMF to devalue the Nigerian currency, naira - Kelvin Nwaka. As a trained economist, I have no alternative than to educate the Buhari e-rats on what IMF is all about. Enjoy Reading: Topic: IMF; International Monetary Fund. Course Rep: Kelvin Nwaka Lecturer: Comr. Chinua Godwins Nduka. University: Federal University of facebook, 2015. The IMF is a self-described organization of 188 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. The organizations objectives are stated in the Articles of Agreement[4] and can be summarised as: to promote international economic co-operation, international trade, employment, and exchange-rate stability, including by making financial resources available to member countries to meet balance of payments needs. IMF and Globalization encompasses three institutions: global financial markets and transnational companies, national governments linked to each other in economic and military alliances led by the US, and rising global governments such as World Trade Organization (WTO), IMF, and World Bank. These interacting institutions create a new global power system where sovereignty is globalized, taking power and constitutional authority away from nations and giving it to global markets and international bodies. I, Comrade Godwins Nduka submits that this system institutionalises global inequality between western countries and the Majority World in a form of global apartheid, in which the IMF is a key pillar. The establishment of globalised economic institutions has been both a symptom of and a stimulus for globalization. The development of the World Bank, the IMF regional development banks such as the European Bank for Reconstruction and Development (EBRD), and, more recently, multilateral trade institutions such as the WTO indicates the trend away from the dominance of the state as the exclusive unit of analysis in international affairs. Globalization has thus been transformative in terms of a reconceptualising of state sovereignty. In Contrast, IMF performs the following functions. (i) Providing short terms credit to member countries for meeting temporary difficulties due to adverse balance of payments. (ii) Reconciling conflicting claims of member countries. (iii) Providing a reservoir of currencies of member-countries and enabling members to bor row on anothers currency. (iv) Promoting orderly adjustment of exchange rates. (v) Advising member countries on economic, monetary and technical matters. Base on my brother, Kelvin. Nwakas statement, appendix four(iv) of the IMFs functions is where lies the argument. Ive noticed that some image makers of Buhari dont know how or what necessitates the devaluation of currencies. Ive no alternative than to evangelize it. Reasons Why Currencies Are Devalued(Currency Devaluation Policy): Devaluation on modern monetary policy is a reduction in the value of a currency with respect to those goods, services or other monetary units with which that currency can be exchanged. Moreso, Devaluation’ means official lowering of the value of a countrys currency within a fixed exchange rate system, by which the monetary authority formally sets a new fixed rate with respect to a foreign reference currency. The following are the main objectives of devaluation of currency: 1.To Encourage Exports: Devaluation policy is adopted to increase the exports of the country. As the currency of any country is devalued, the commodities of that country become cheaper for the other countries and they increase their demand. 2.To Discourage The Imports: As the currency of any country is devalued the other countries goods becomes costly to import from that country. So the people reduce their demands for foreign goods. 3.To Correct The Balance Of Payment: When the balance of payment of any country is unfavorable the devaluation policy is adopted. When the currency is devalued, the value of imports increases but the value of exports will be greater than the value of imports; I will say that the balance of payment is favorable. POSITIVE EFFECTS: 1.Correction of Deficit: Devaluation makes home goods cheaper to foreign countries and foreign goods expensive in the home country. In this way deficit in the balance of payment is correct. 2.Adjustment of Currency Value: When the currency is overvalued, devaluation brings equilibrium in the external and internal value of the currency. So the various imbalances in the economy remove. 3.Increase in Foreign Aid: The international lending agencies like the IMF, IBRD insists upon devaluation, especially in underdeveloped countries like India, Pakistan etc. Foreign investor also feels pleasure to make the investment in those countries where the currency is devalued. 4.End of Uncertainty: Devaluation removes the uncertainty in the business circles. The rate of investment also increases. 5.Inflow of Remittances: The workers who are working abroad they would prefer to send capital in the country, because they will get the more value in terms of foreign currency. However, at this Juncture, I want to state that Buhari is economically blind not to have accepted the devaluation of naira as advised by IMF. In this I say, Nigeria cannot afford to go backward economically. We cannot give power to a man who have no clue on what development, economy and international trade is all about. He should be sent back to the barracks. So to my fellow comrades, before you promote someones action, go and do a cursory study of that policy, programme or object. Thank you President Goodluck Jonathan, Nigeria is moving forward! Ill always remain a Jonathanian. What about you?
Posted on: Sat, 13 Dec 2014 09:28:41 +0000