Over the years, there has been a fall in the value of the naira compared to other currencies. Recently, the worst thing that has not happened in the history of the country's government has happened, as the value of the naira kept depreciating to the lowest level compared to other countries’ currencies. It's a slap on the faces of our leaders. Although we can never tell if this is a means of reshaping the economy, something should have been put in place to reduce the suffering to some degree. The downfall of the naira has made the citizens cry, as they now buy items at a higher rate compared to when they were appreciated.
***What I think can cause the fall of the naira is listed below: ***
Inflation:
The price of goods and services in Nigeria is alarming, and as there is an increase in the price of goods, people, or consumers would need more money to buy items, which would also temper the cost of importation. Nigeria majorly depends on imported goods, and there is nothing they can do to stop it as it is also part of the Naira degrading or downgrading. We import food, fuel, and other valuable items undoubtedly.
One thing that kept Nigeria living has now worn away. The investors who have companies here in Nigeria were unable to cope with their companies and so decided to relocate to other countries just because of the cost of living and inflation. The increase in tax rates also contributed to the relocation of those investors. On a normal level, investors are the ones who would bring development to Nigeria, but looking at the inflation rate in Nigeria, no one would be able to cope with it.
It can also temper the exchange rate pressure in the country. When the naira decreases, citizens will find it difficult to purchase goods as the goods will be on the high side. Finally, it would enhance the price of imported goods as the naira decreased. So, the price of imported goods would be on the high side, which would increase the price of locally made goods.
Political instability:
Nigeria has constantly changed policies that are capable of creating conflict and a lack of technical know-how for the leaders. Some of them are just figureheads siphoning off the nation's economy. This is a result of the capability to handle national issues instead of facing the aspect of bringing in corrupt-minded people as rulers.
This political instability can lead to the general populace losing trust in the government, which, on the other hand, can bring about protests and violence among the citizens.
So, when all these are not put in normal shape, the country’s currency will keep depreciating.
Economic downturn:
Nigeria's economy is crying to the bottom as it is in bad shape, and no one knows when everything will turn out to be better. It is experiencing a downturn, and everyone is suffering from it, including the rich.
Nigeria relies deeply on oil to survive. This area is not smiling, and so every Nigerian is lamenting seriously just because of the shape Nigeria's economy has taken. The government needs to move into other items that can also bring the country's economy to the highest level.
This downturn can cause the naira to drop in value deeply.
Unforeseen Events:
There are some events that would affect Nigeria's economy, although some of these are not possible here in Nigeria. These events may be natural disasters (not possible except floods), terrorist attacks (this one is possible as Nigeria is suffering from how to get the terrorists attacked), financial emergencies (this can happen and has also happened here in Nigeria), protests (it's the other of the day as everyone wants to protest on the high side of costs of goods or inflation of items), etc. All these can influence the downfall of the naira. It is even influencing it presently.
Hypothetical trading:
The foreign exchange rate has an effect on the naira. The market is not smiling, and so the Nigerian naira is also on the downside. $1 is exchanged for a tangible number of Naira, which has not happened before. It's the first of its kind.
Finance charge:
Nigeria's interest rate has been lowered, and this has caused investors to move to other countries with higher interest rates. The movement of these investors has had an impact on the naira.
The image above is taken by me with my phone