Effects of exchange rate fluctuations on economic growth. Naira devaluation and trade balance in nigeria world scientific news. Also, after a devaluation, uk assets become more attractive. A devaluation means there is a fall in the value of a currency.
Impact of currency devaluation on economic growth of nigeria. A devaluation of the exchange rate will make exports more competitive and appear cheaper to foreigners. 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. In the shortterm, a devaluation tends to cause inflation, higher growth and increased demand for exports. It was pointed out that nigeria was going to make the same mistake that was made thirty years ago. This paper explores that available way forward to the controversial debate on the effect of naira devaluation and justification for either of the sides of the coin in this paper. Okaro 4 currency devaluation is habitually triggered when there is a deficit in trade balance and balance of payment bopbot with the 20162017 naira devaluation in nigeria associated to shocks springing out from the declining oil price and external economic and financial shocks. Will devaluation of the naira significantly reduce poverty in nigeria ii. But the point must be made that this expectation may be unrealisable of two variables the falling oil prices and lower crude production aggregate. Currency devaluation cuddles acceptance in nigeria during the. Effect of currency devaluation in an era of economic.
Strategic management analysts are in agreement on the. Which, therefore, propel nations to adopt devaluation as the last resort and as a key to economic lift. Nigeria will decrease its dependence on imported goods. Impact of devaluation of naira in the nigerian economy. As devaluation has to do with sustaining desirable exchange rate, it is therefore patients to examine the nigeria experience in devaluation if we are to look at the exchange rate polities in nigeria. Effectiveness of naira devaluation on economic growth in nigeria. Currency devaluation and nigerian economic growth 20002015. Pdf naira is the currency denomination in nigeria and currently, the country is said to be a net importer of product as opposed to a net exporter find, read and cite all the research you. Effect of currency devaluation on macroeconomic variables. The devaluation of the naira would enhance the level of nonoil exports. Cbn governor godwin emefiele announced the devaluation of the naira. Pdf effects of currency devaluation on the performance. The implication of naira devaluation to the nigerias. Inflation and unemployment are the side effects of currency devaluation in the short run according to marshalllerners condition which produces a jshaped curve.
The devaluation had tremendous negative effects in several sectors of the economy. Assessing the impact of nigerias naira depreciation on output and. The major negative fallouts of the above were persistent balance of payment deficit external imbalance and huge fiscal deficits internal imbalance. This is a conceptual study that proposes to examine the association between currency devaluation depreciation and the performances of businesses in the northwestern geopolitical zone of nigeria. This paper investigated the effect of currency devaluation on the economic growth of nigeria. Pdf currency devaluation and nigerian economic growth.
In the opinion of aiya 2014, devaluation of currency became popular in nigeria when babangida led administration in 1986 instituted the structural adjustment programme as a policy designed to achieve a realistic exchange rate for the naira that was overvalued. The effect of devaluation of naira on the nigerian economy may be extremely positive. In 1986, nigeria also tried to fight against devaluation. This paper examines the effects of naira devaluation on trade. Pdf currency devaluation and nigerian economic growth 2000. Therefore, it may start producing and exporting its products to foreign markets.