I don't know how the devaluation of a country's currency would help during inflation, it will rather aggravate the problem especially if the country is an importing one. In my experience, you should not use third-world countries as an example, they are still under the slavery of the top world countries and their currency devaluation are not often to help the economy but to submit to the pressure of bodies like IMF, World Bank and other. They often do this because of favours needed from them, like for loans and others, and the bodies might gauge it based on what they believe the currency rate should be, which may or may not be the true reflection.
Such happens so much in Nigeria, but has it solved the problem? Certainly No, it rather aggravates it.
The only fair reason why sane and working countries devalue their currency without external interference is to encourage cross-border trade. Countries turn to countries with cheap products and services, so it helps the economy by increasing exportation and encouraging trade balance.
Topic: How Does devaluation of currency helps to build a dwindling economy? - page 2. (Read 234 times)
August 22, 2023, 11:23:47 PM
August 22, 2023, 05:53:26 PM
In building a struggling economy at a time of global economic crisis caused by Covid, global inflation etc, some experts have argued that it's sometimes necessary to devalue a country's currency in a bid to keep the country's economy afloat, hoping that this measure would strengthen the currency and subsequently improve their economy. Third world countries are always caught up in this ugly situation.
Today, local currencies of Ghana and Zimbabwe, to mention a few, are stock in a familiar terrain of currency devaluation that had adversely shut down some SMEs and impoverished their citizens. Because I believe, in improving an economy of a country, the country must improve on its production base, her export on goods produce locally should improve as well, the ease of doing business within the country play a key factor too, foreign and direct investment plays an important role on the economy of a country.
So my question is, how does these particular act of devaluing a country's currency helps in building an economy?
Today, local currencies of Ghana and Zimbabwe, to mention a few, are stock in a familiar terrain of currency devaluation that had adversely shut down some SMEs and impoverished their citizens. Because I believe, in improving an economy of a country, the country must improve on its production base, her export on goods produce locally should improve as well, the ease of doing business within the country play a key factor too, foreign and direct investment plays an important role on the economy of a country.
So my question is, how does these particular act of devaluing a country's currency helps in building an economy?
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