What is Naira Devaluation?
What is Naira Devaluation?
Brethren!
We hate to be the bearers of bad news (or to be super dramatic by quoting Shakespeare’s Macbeth) but something potentially wicked this way comes. The thing in question is called Naira Devaluation and from the looks of it, it’s going to kick everyone’s asses.
That being said, don’t worry. We’re here to tell you about the different ways you can protect yourself from this potentially terrible thing. We’ll get to that in a minute. But first:
This is the deliberate downward adjustment or official lowering of a currency’s value relative to another currency or group of currencies. In the case of Nigeria, it would mean the deliberate downward adjustment of the Naira relative to the dollar.
Because of how the coronavirus is ravaging the known world and slowing down global economic growth, there has been a dip in oil prices, draining Nigeria’s foreign reserves and leaving the Central Bank unable to maintain the Naira’s value much longer.
The devaluation of the Naira will make the goods we export look cheaper to foreigners, leading to an increase in demand for exports, which in turn means more revenue for Nigeria. However, devaluation is the exact opposite effect on the goods we import. Imported goods will become expensive because the Naira will have lost value when compared to the exchange rate.
This will lead to an increase in demand for homemade goods – because they’ll be cheaper than the imported stuff we’re currently used to. This doesn’t seem so bad until you remember that without the usual competition, Nigerian industries might become less efficient, causing them to produce sub-par products because they know the people have no choice and will buy them anyway.
The gist of this is that Naira Devaluation may lead to inflation. Also, this:
The answer is the tweet screenshot above. Anyone still holding on to Naira assets at this point is going to get screwed when the devaluation hits. E.g people who have Naira lying about savings accounts, etc. However, people who have investments in things like real estate, stocks, Eurobonds, domiciliary accounts etc (all foreign asset classes) are the ones who will escape the effects of the Naira devaluation.
This is where RISE VEST comes in.
RISE is an investment app that lets anyone put their money in safe dollar investments around the world. Through RISE, you can invest in US Real Estate, US, and Fixed Income. RISE is secure and offers a unique experience with long-term returns. If you want a safe place to invest your money in USD, you’d be wise to invest with RISE. It doesn’t get much safer elsewhere.
Here’s a tweet that puts this in perspective:
The RISE app is available for both Android and Apple devices. Click here to download and start investing today.
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