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Posted by Felix Okoli on Wednesday December 31, 2014 at 20:29:38:

Reports in the media have it that the Central Bank of Nigeria(CBN) had devalued the Nigerian Naira to N168 for a single US dollar. Prior to this event, the Naira has been trading at about N155 to the US dollar.

Many people were certain that this was going to increase the cost of items imported into Nigeria and since Nigerians mostly depend on these things, they are going to spend more money to get it and it's most likely going to lead to inflation.

For Nigerians who save money in foreign currencies such as foreign bank accounts or local domiciliary accounts, they are hardly going to feel the pain since their money is safe. For those who however save money in Naira savings account, they have just lost some value in their money most especially because the bulk of their savings is mostly used to purchase things that are imported with US dollars.

If Nigerians don't really depend on imported items such as clothes, shoes, books, food and so on, then it may not really matter much if our Naira was devalued but when you consider the fact that most things our money is used to buy are not made in Nigeria, then you'd agree that a Naira devaluation only makes people who hold onto the Naira a bit poorer.

It's not normally a smart investment decision to save money in Naira savings account for the long term unless you just need the money in case of emergencies. It would have been better to convert one's Naira account to other forms of investment like stock, real estate or even foreign currencies.

Keeping a lot of money in a Naira savings account is good but not for the long term. This is because the Nigerian Naira has been depreciating since the 1980s and chances are that it would keep depreciating. It's probably ok if you save it only for maybe 6 months of year but not 2 years and more.

At the rate at which the Naira keeps losing value even without the CBN devaluation efforts, interest rates on savings or even fixed deposit are not sufficient to make up for it and so is mostly only recommended for those who just need money in cases of urgency.

The longer one keeps the Nigerian Naira in a savings account, the more it loses value and so one should be thinking of higher forms of investment if you really want to grow financially wealthier.

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Comments:
Re: How Naira devaluation affects your Naira savings account Reply by Tosin Adekoyacount on Wednesday January 7, 2015 at 24:38:5:

Can I fixed money in domiciliary account

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Re: How Naira devaluation affects your Naira savings account Reply by Felix Okoli on Wednesday January 7, 2015 at 24:38:5:

I don't know of any bank that offers fixed deposit for domiciliary accounts yet.

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