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Are you sure you know what is devaluation?:see a simple explanation here



Here I would explain what this two terms mean. However in one of my posts I explained what exchange rate meant, and I distinguished between fixed and floating exchange rate, that was very important because it would give you a better understanding of devaluation and depreciation .If you missed it click  here
Definition of Devaluation: The term devaluation is a situation where a country makes a CONSCIOUS decision to lower its EXCHANGE RATE in a fixed exchange rate system. Therefore, technically a devaluation is only possible if a country is a member of some fixed exchange rate policy.
For example the CBN was forced to devalue the naira because of the discrepancy between fixed rate and parallel rate. Devaluation of the, the naira, took effect on 20 June 2016. The naira devaluation let to an exchange rate from 199/US$ to around 280/US$
Definition of depreciation: When there is a fall in the value of a countries currency in a floating exchange rate.it can also be said to be when a countries exchange rate falls in a floating exchange rate system. Thus   This is not due to a government’s Intervention, but due to supply and demand side factors (market forces).
For example, the naira depreciated badly because of the recent floating exchange rate regime by CBN. The naira depreciated at the BDC and parallel market segments by 2.9 percent and 3.13 percent to N355 and N363 per dollar respectively.


By now you are expected by now to know the differences, and thus speak like a financial expert, *winks*
Not those who say “devalue the naira” and have no idea what it actually mean. If you have any questions please feel free to drop it in the comment box, and I will address it a quick as possible

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