Will Naira devaluation lead to inflation in 2015

The CBN governor has recently implemented a monetary policy by reducing the value of the Naira against foreign currencies in a bid to probably help the Nigerian government have more money to execute projects in the country since the government saves money in US dollars. Although the official reason given by the CBN governor on this recent action was to simply let the official exchange rate be a true reflection of the market forces of demand and supply rather than spending more resources to make it stronger. So, the CBN just let the Naira slide and some expires believe it's just to help the government have more Naira to spend on projects by the time a withdrawal is made from our foreign reserve.

The bottomline is that the Naira has been devalued and it's definitely going to have an effect on people living in Nigeria.

Nigerians are going to have to spend more Naira in order to access foreign goods and services. Given that the country is already an import dependent nation and we rarely produce most of our needs including petrol which is imported, the devaluation might in a way lead to inflation by the time 2015 rolls in.

What kinds of clothes do you wear? Are your shoes made in Nigeria? Do you drive Nigerian made cars? Do you use Nigerian made electronics? Do your kids read Nigerian published books? Well, the extent to which Nigerians are going to be affected by the devaluation will depend on where they mostly spend their Naira on. Do we spend it more on Nigerian made goods or on imported goods?

I think it's going to have an effect in the general price of stuff people buy in Nigeria as most of those things are imported from foreign countries. When importers have imported products into the country, they would come at a higher price to the Nigerian market and the end users will be the worst his since they'll be spending more Nair to buy the same products they're already used to.

Another imported product we should not be ignoring is on the price of petroleum products like gasoline and petrol. Refineries in Nigeria re not working and if these products keep getting imported with a weakened Naira, it would cause a lot of things to rise and that includes petrol prices at filling stations as well as transportation costs.

Naira devaluation will only make people who hold most of their assets in Naira to lose money while those with foreign assets get richer and it would encourage more investors to bring money into the country.

So, I think we should expect prices of things in Nigeria to go up a bit higher by the time 2015 rolls in.