Naira devaluation may not even be the only reason why you should Save your Nigerian Naira in Dollars (USD) as businesses and individuals. But an apparent purpose and preparedness might save one a lot of loses regarding the current trends.
No Nigerian can claim unaware of the fact the Oil has been the bedrock of the Nation’s economy. And the rise and fall of the prices of Oil imply the rise and fall of the values of Naira (in multiple markets).
This publication may not dig dipper into the reasons behind the popularity of the US Dollars in the most African market. Still, inevitably touches why it is the most accepted/used foreign currency in the shores of Africa.
However, with the recent development in the Forex spheres, and the sharp rise of dollars, against the Nigerian Naira, it has become critical for users to reconsider saving in lower or higher currencies.
One of the most popular assertions is that businesses that don’t earn in Dollars are collapsing, but on a contrary view, we may likely see false conceptions. But if your search has been how to save Naira in Dollars, then this will probably serve as a proactive financial strategy.
First and formats is paramount to understand the relationship between the two currencies, the values and possible rise and falls in the parallel markets even as it is also vital to note that the US Dollar is not the only hard C to be considered while searching escape route from the devaluating Naira.
In very plain terms, here are just a few reasons why people prefer to save their Naira in Dollars or through any other currencies:
- The current economic team seems clueless
- Naira Values has no hope of rising now, owing to the undiversified nature of the Nation’s economy.
- Some businesses purchase in higher currencies.
- Inflation may be the result.
Countless financial reporters and reliable economic teams have always warned against the over-dependency in Oil. But it has become an uncontrollable reality the global drop in oil prices is piling pressure on Naira to be evaluated.
This is a result of the depleting export returns which continue to attack the foreign-exchange reserves. But in case one is unsure of how these factors contribute to the Naira devaluation, it prevents and soils the central bank’s ability to support the currency.
Save in Dollars (of other Foreign Currencies)
Last three months, from the time of composing this article, the Nigerian Oil was sold per barrel (at $58.9). Two months later, it dropped to $50.2; but the current value struggle around $30.9. This is just a single statement that has spoken volumes regarding the hope for Naira recovery.
Nigeria, being put on a spinning wheel, has continuously proven to be a disturbing reality that most analysts might find unpleasant to address. Still, these facts do not in any way imply there is no hope for a massive turn around.
One of the challenges that seem won in many scopes is the over-dependency on the oil proceeds which appears to hover around those aspects that elude the decision-makers who ought to have been investing mainly on alternative sources of foreign exchange forces.
What Devaluates a Currency?
The study of national economic histories, the implications of exports strengths and central banking systems reveal certain factors behind the continued devaluation of Naira, and other currencies around the world.
This call to save from Nigerian Naira to Dollars (USD) and others is not unconnected with some of the monetary actions that have also affected many nations in the past. But what causes this devaluation?
Currency devaluation is a deliberate financial adjustment against another currency, carried out by the country’s monetary authority; this is usually done in order to support the export strengths of a country and when the products and services of a nations decline in value.
In the case of Naira crashing to dollars (USD), the mainstay of the economy (Oil) has continued to show general weakness, and it’s customary that her currency devaluates to support these declines.
Note: These are not the professional Definition to devaluation, but explanations from the implications. This is done to drive home a point, and a reason why one should save his or her Naira in dollars against the recent possible inflation threats.
So, in a more definite sense, any currency can be evaluated against the other, and the recent setback the Nation’s economic backbone suggests that the official Naira and Dollar rate may affect the traders and businesses that depend on these currencies to thrive
By Definition: devaluation implies measures by monetary institutions, to improve what’s known as the country’s trade balance. This is always done to scale up the export movement of the country in times when lower trade values bring backwardness to the country’s economy.
For example, the total value of imports into Nigeria is outweighing the absolute benefits of our export as a country. These include shipping of both services and products at every aspect.
Unless such deficiency is tackled, the value of Naira against the USD will continue to dwindle; and there will be no hope to salvage the worth of Naira when there is inadequate or no economic blueprint at the federal level.
Why Dollars in Nigeria
Aside from Naira, the United States Dollars (USD) is one of the most used currencies in the country.
This does not suggest the superiority of one country or Nation to the other but marks an economic fact that still puzzles small and medium businesses.
It was hilarious when restaurant altered their menu listing the prices due to dollar approaching in the parallel market.
This does a long way of suggesting that this devaluation or appreciation of Naira against dollars affects everything in the country.
But so far, most commodities exported were trade commodities with dollars; there is no further explanation to why the dollar will continue to replace the country’s currency. And in as much as the import scale does not have a correlational relationship with the Nigerian export worth, and economic newbie can even explain the reason for dollars.
How to Save your Nigerian Naira in Dollars
Anyone can save any money using any currency of choice, and your ability to keep your Naira in Dollars take same feasibilities. For the sake of one domestic or international business, saving money in dollars now can help salvage the worth from being evaluated too.
There are quite a good number of alternative and methods of saving Naira in dollars or any currency around the world. And these can be done using your local commercial banks.
Because of the technicalities and risks involved in most online platforms, we do not make recommendations outside domiciliary accounts with banks. We have written on how to create and run a domiciliary account in Nigeria, but for the sake of this post, one can do the following:
- Gather a valid means of identification (Driver’s license or International Passport)
- Local any bank Branch of your choice.
- Demand for a domiciliary account in Dollars
- Source for Affordable dollar Exchange and get your account created.
One other thing you can do is to obtain postpaid cars and cheques that follow such account, in case of need for withdrawal.
The domiciliary account ATM Card can be used anywhere in the world, depending on the card or debit card that you requested for. This is a feature that has always made this account the friendliest for international businesses and travellers.