The Monetary Policy Committee of the Central Bank of Nigeria on Tuesday bowed to pressure by devaluing the naira from N155 to N168 to the US dollar.The announcement was made by the CBN Governor, Mr. Godwin Emefiele.In devaluing the country’s currency, Emefiele said the committee considered the fact that the falling oil price had reduced the accretion to external reserves, thus constraining the ability of the bank to continually defend the naira and sustain the stability of the exchange rate. Lets break it down for you-A currency devalues when its value declines in relation to one or more other currencies.Devaluation in 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. Effects of a devaluation?A devaluation of the exchange rate will make exports more competitive and appear cheaper to foreigners. This will increase demand for exports.A devaluation means imports will become more expensive. This will reduce demand for imports.Inflation is likely to occur because imports are more expensive.In economics, inflation is a sustained increase in the general price level of goods and services in an economy over a period of time-Are you prepared for this eventuality?How would describe the days ahead for you and us all,given the above?How do you envision life in Nigeria in these times
Posted on: Wed, 26 Nov 2014 08:12:18 +0000
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