Don x-rays the ripple effects of Naira devaluation

Don x-rays the ripple effects of Naira devaluation

Friday, November 28, 2014 1:41 pm

Dr. Obida Wafure of the Economics Department, University of Abuja, says the recent devaluation of naira by the Central Bank of Nigeria (CBN) will have both positive and negative effects on the economy.

Just as the devaluation will encourage local industries, it will and also bring about closure of many that depend mainly on imported raw materials, the economics teacher said.

The CBN had on Tuesday in Abuja announced the devaluation of naira by N13 as part of measures the bank said were aimed at strengthening the nation’s economy.

“Once a currency is devalued, there are negative and positive effects to the economy, especially at the value chain of every nation state, but the negative effect supersedes the positive effects.

“The negative effect is that it will increase the rate of importation and so many industries will be shut down as they will not afford to import some raw materials.

“It will also lead to unemployment and lower the production capacity and thereby bring about inflation as the Growth Domestic Production (GDP) growth rate will fall.

“Our GDP growth rate is measured by the activities in the economy, so by the time inflation is going on, the economic activity of the country will fall.‘’

Wafure defined devaluation as when a currency is deliberately lowered to the value of the money of one country when exchanged with another country’s currency and depreciation when lowered naturally.

On the appointment of the Minister of Petroleum Resources, Mrs. Dieziani Allison-Madueke, as the first female OPEC Pr

Join The Conversation

What do you think?

This site uses Akismet to reduce spam. Learn how your comment data is processed.