THE EFFECTS OF EXCHANGE RATE AND INFLATION IN NIGERIA

The impacts of the Nigerian currency’s exchange rate and inflation have been studied and discussed for decades. Since Nigeria’s economy is so dependent on oil sales, the country is particularly sensitive to shifts in the international oil market. The result is a change in the country’s inflation rate and currency exchange rate. The value of one currency expressed in terms of another is known as the exchange rate.

The CBN, or Central Bank of Nigeria, sets the currency rate in the country. When the value of the naira falls in comparison to other currencies, the purchasing power of Nigerians falls as a result. Inflation, defined as a rise in the price level across the economy, can result from this.

Nigeria has suffered from high inflation rates for many years. For the better part of a decade, the country’s inflation rate has been in the double digits. As a result, the cost of living has increased, reducing the standard of life for many Nigerians.
Inflation and the value of the naira have far-reaching consequences in Nigeria. For instance, the country’s high inflation rate has discouraged potential investors outside. This has therefore reduced the number of available jobs in Nigeria. Moreover, Nigerians have seen a decline in the purchasing power of their savings and investments as a result of the country’s high inflation rate.

Nigeria’s government has enacted many measures to mitigate the consequences of its currency’s exchange rate and inflation. To lower inflation and maintain a stable currency exchange rate, the CBN has taken various measures. To make the nation less susceptible to swings in the global oil market, the government has also developed efforts to diversify the economy away from oil exports.

Overall, the ripple effects of Nigeria’s currency rate and inflation are large and far-reaching. Because of its reliance on oil exports, the country’s currency and inflation rate are very sensitive to changes in the international oil market. Many Nigerians’ standard of living has declined as a result of the country’s high inflation rate, and fewer foreign investors have put money into the country as a result of this. However, the government has enacted efforts to counteract these impacts and restore economic stability.