A Profile of Nigeria’s Exchange Rat

A Profile of Nigeria’s Exchange Rate Development

Between 1960 and 1967, the Nigeria currency was adjusted in relation to the British Pound in a one to one relationship between them. Between 1967 and 1974, another fixed parity was maintained with the American Dollar. This system was abandoned between 1974 and 1976, when an independent exchange rate management policy that pegged the naira to either the US dollar or the British pound sterling was put in place. During this period, a policy of gradual appreciation of the naira was pursued. Because of the huge earnings from crude petroleum export over the period, Nigeria persistently ran appreciable external surpluses in the balance of payments, which supported the appreciation of the naira. The exchange rate over-valuation that followed helped to cheapen imports of competing food items as well as agro-based and industrial raw materials. As a result, there was rapid expansion in the importation of these goods to the detriment of local production of similar goods. When it became obvious that aggregate import demand had outstripped total foreign exchange available for imports, trade restriction through import licensing scheme was introduced. Towards the latter part of 1976, arising from the changing fortunes to Nigeria’s economic circumstances, a policy reversal was effected in the management of the naira exchange rate. There was a deliberate policy to depreciate the naira, through this was not systematic. However, a major policy reversal was effected in September 1986 when the fixed exchange rate regime had to be discarded and the flexible exchange rate regime was put in place following the adoption of the SAP. With the adoption of SAP, foreign exchange allocation and import licensing procedures were abolished and transactions in foreign exchange were subjected to market forces under an auction system. This new exchange rate policy helped to remove the over-valuation problem to the extent that the naira now became under-valued. As noted by Honoland and Lane [18, 19], exchange rate depreciation had since resulted in the dramatic increase in the naira price of imports and this is expected to discourage importation and the naira cost of imported items have also risen astronomically.

Hasil (Bahasa Indonesia) 1:

Profil perkembangan kurs Nigeria Between 1960 and 1967, the Nigeria currency was adjusted in relation to the British Pound in a one to one relationship between them. Between 1967 and 1974, another fixed parity was maintained with the American Dollar. This system was abandoned between 1974 and 1976, when an independent exchange rate management policy that pegged the naira to either the US dollar or the British pound sterling was put in place. During this period, a policy of gradual appreciation of the naira was pursued. Because of the huge earnings from crude petroleum export over the period, Nigeria persistently ran appreciable external surpluses in the balance of payments, which supported the appreciation of the naira. The exchange rate over-valuation that followed helped to cheapen imports of competing food items as well as agro-based and industrial raw materials. As a result, there was rapid expansion in the importation of these goods to the detriment of local production of similar goods. When it became obvious that aggregate import demand had outstripped total foreign exchange available for imports, trade restriction through import licensing scheme was introduced. Towards the latter part of 1976, arising from the changing fortunes to Nigeria’s economic circumstances, a policy reversal was effected in the management of the naira exchange rate. There was a deliberate policy to depreciate the naira, through this was not systematic. However, a major policy reversal was effected in September 1986 when the fixed exchange rate regime had to be discarded and the flexible exchange rate regime was put in place following the adoption of the SAP. With the adoption of SAP, foreign exchange allocation and import licensing procedures were abolished and transactions in foreign exchange were subjected to market forces under an auction system. This new exchange rate policy helped to remove the over-valuation problem to the extent that the naira now became under-valued. As noted by Honoland and Lane [18, 19], exchange rate depreciation had since resulted in the dramatic increase in the naira price of imports and this is expected to discourage importation and the naira cost of imported items have also risen astronomically.

Hasil (Bahasa Indonesia) 2:

Profil dari Nigeria Tukar Pembangunan Antara 1960 dan 1967, mata uang Nigeria telah disesuaikan dalam kaitannya dengan British Pound dalam 1-1 hubungan antara mereka. Antara 1967 dan 1974, paritas tetap lain dipertahankan dengan Dollar Amerika. Sistem ini ditinggalkan antara tahun 1974 dan 1976, ketika sebuah kebijakan manajemen nilai tukar independen yang dipatok naira untuk baik dolar AS atau Poundsterling Inggris itu diberlakukan. Selama periode ini, kebijakan apresiasi bertahap naira itu dikejar. Karena pendapatan besar dari ekspor minyak mentah selama periode tersebut, Nigeria terus-menerus mengalami surplus eksternal yang cukup dalam neraca pembayaran, yang didukung apresiasi naira tersebut. Nilai tukar over-valuasi yang diikuti membantu memurahkan impor bersaing makanan serta bahan baku berbasis agro dan industri. Akibatnya, ada ekspansi yang cepat dalam impor barang tersebut sehingga merugikan produksi lokal barang sejenis. Ketika menjadi jelas bahwa permintaan impor agregat telah melampaui jumlah devisa yang tersedia untuk impor, pembatasan perdagangan melalui skema perizinan impor diperkenalkan. Menjelang bagian akhir dari tahun 1976, yang timbul dari nasib berubah dengan keadaan ekonomi Nigeria, pembalikan kebijakan yang dilakukan dalam pengelolaan nilai tukar naira. Ada kebijakan yang disengaja untuk terdepresiasi naira, melalui ini tidak sistematis. Namun, pembalikan kebijakan utama yang dilakukan pada bulan September 1986 ketika rezim nilai tukar tetap harus dibuang dan rezim nilai tukar yang fleksibel itu diberlakukan setelah adopsi SAP. Dengan penerapan SAP, alokasi devisa dan prosedur perizinan impor dihapuskan dan transaksi dalam mata uang asing menjadi sasaran kekuatan pasar di bawah sistem lelang. Ini kebijakan nilai tukar baru membantu untuk menghilangkan masalah over-valuasi sejauh naira sekarang menjadi kurang dihargai. Sebagaimana dicatat oleh Honoland dan Lane [18, 19], depresiasi nilai tukar telah sejak mengakibatkan peningkatan dramatis dalam harga naira impor dan ini diharapkan dapat mencegah impor dan biaya naira barang impor juga naik astronomis.