As a matter of fact, not every people that spends money knows what currency really means. In lieu to this, the meaning of currency should be the first thing to observe when discussing something related to this topic.
Many dictionaries have tried to define the word currency as “money or other items used to facilitate transactions”. But, in the contextual definition, currency is a medium of exchange for goods and services. In short, it’s money, in the form of paper or coins, usually issued by a government and generally accepted at its face value as a method of payment. Currency is the primary medium of exchange in the modern world, having long ago replaced bartering as a means of trading goods and services.
Currency devaluation on the other hand is a deliberate downward adjustment of the value of a country’s currency against another currency. Devaluation is a device utilized by fiscal specialists to improve the nation’s trade balance by boosting sends out at minutes when the exchange deficiency may turn into an issue for the economy.
After devaluations, the same amount of a foreign currency buys greater quantities of the country’s currency than before the devaluation.This implies the nation’s items and administrations are probably going to be sold at lower costs in outside business sectors, making them increasingly serious. Devaluation for the most part happens when an administration sees normal capital outpourings from a nation, or if there is a huge exchange shortfall where the all out estimation of imports exceeds the absolute estimation of fares.
The country Nigeria uses Naira and Kobo as the denomination of her currency. The Naira was a significant global trade currency during the 1970’s in any event, achieving a pace of trade of 2 Nairas to the US Dollar at the hour of its first issue in 1973 instead of the Pound. These days, after genuine money related depreciation, 1 US Dollar is comparable to more than 390 Nairas.
The Naira is partitioned into 100 Kobos. Not many of the kobos are right now available for use because of the degrading of the Nigerian money. The devaluation of an economic recovery panacea always
recommended by the International Monetary Fund and the World Bank had never helped any
Nation to recover and so Nigeria will not be an exception.
Although currency devaluation would
promote trade balance, alleviate balance of payments difficulties and accordingly expand output
and employment it switches demand from imports to domestically produced goods by increasing
the relative prices of imports and making export industries more competitive in international
markets thus stimulating domestic production of tradable goods and inducing domestic industries
to use more domestic inputs. Although, money supply interest and exchange rate affect economic growth significantly, currency devaluation has a
negative and insignificant impact on economic growth of Nigeria.