WHAT HAPPENED TO YOUR NAIRA?
By Lácedar Terry
What a year 2020 has been! With the pandemic knocking on doors around the world, this unwanted guest has had a massive impact on the world’s economy as countries struggle to save the health of their citizens as well as their economy. One of these effects the pandemic has had on the world’s economy is inflation.
Over the past months, prices of goods and services have experienced a spike as countries try to recover from a total lockdown. Businesses were closed, thereby shutting down internal revenue, while more and more expenditures were made to sustain some economies. Inflation has been on the rise and the foreign exchange markets have yet to recover from this global impact.
Let’s talk about what inflation is for a second.
Inflation depicts an economic situation where there is a general rise in the prices of goods and services, continuously. When there is inflation, the currency loses purchasing power i.e. the purchasing power of a given amount of naira will be smaller over time when there is inflation in the economy.
For instance, if by January 2020, ₦1,000 can buy two shoes and the prices of shoes have doubled by October 2020, it means ₦1,000 will only be enough to buy one shoe.
So how has it affected your naira?
Nigeria like other countries around the world is still licking her wounds from the economic downturn that came with the COVID-19 pandemic. By August 2020, Nigeria’s inflation rate has hit its highest in 30 months from 12.13% in January to 13.71% by September 2020. This was contained in the Consumer Price Index (CPI) report, released by the National Bureau of Statistics (NBS).
Almost every sector of the economy has been affected with prices going up on a monthly basis. This means the value of your ₦5,000 in January has gone down in recent months. If you have been saving your money in the bank, lending money or simply investing your money for interests below the inflation rate, then you are losing money, a whole lot of it for that matter.
If you are looking to save or invest without losing money, Saversclub and rent-to-own schemes provide interests above inflation rate on your savings and investments.
With inflation on the fast rise, the purchasing power of your naira is depreciating fast too. The Naira is very vulnerable right now as it is constantly under fire in the foreign exchange market. So if you’re asking why a plate of onions originally sold for ₦100 is now being sold for ₦700, inflation happened, and your naira has lost its value.
As scary as it may seem, a further devaluation could occur if forex scarcity persists and corporates find it difficult to purchase forex at the NAFEX (I&E) window, driving up demand in the black market. But hopefully, a re-opening of the economy and the return of full economic activities could change the dynamics of things and re-stabilize the economy.
To get started on savings and investments, please visit our website: www.saversclub.ng or www.onesqm.ng
You can contact us on +2348180000113
