*If government can stop the printing 500 NGN notes and 1,000 NGN notes and officially discontinue its use!

*Reintroduction of Nigeria coins, 50Kobo, 1 NGN and 2 NGN.



Welcome, lets get started by examinining the top 10 performing currencies in the world to gain necessary insights before drawing our conclusions.

*.Kuwait Dinar KWD:  (  1 KWD = 1201.9611 NGN  )
Bank notes: 1/4, 1/2, 1, 5, 10, 20 Dinars
Coins: 5, 10, 20, 50, 100, 200 Fils


*.Bahraini Dinar BHD: (  1 BHD = 956.3254 NGN   )
Bank note: BD 1/2, BD 1, BD 5, BD 10, BD 20
Coins: 5, 10, 25, 50, 100 Fils, BD 1/2


*.Omani Rial OMR: (  1 OMR = 936.2906 NGN  )
Bank note: 1/2, 1, 5, 10, 20, 50 Rials
Coin: 50, 10, 20, 50, 100 baisa and rarely used 200 biasa


*.Jordanian Dinar JDD:  (  1 JDD = 507,65070 NGN  )
Bank notes: 1, 5, 10, 20, 50, Dinars
Coins: 1/2, 1, quirsh, 21/2, 5, 10 Piastras


*.British Pound GBP:  (   1 GBP = 504.8154 NGN   )
Bank notes: €5, €10, €20, €50
Coins: 1P, 2P, 5P, 10P, 50P, €1, €2


*.Caymanian Dollar KYD:  (  1 KYD = 432.7622 NGN   )
Bank notes: 1, 5, 10, 25, 50, 100 Dollars
Coin: 1, 5, 10, 25 Cents


*.Euro EUR:  (  1 EUR = 448.2926 NGN  )
Bank notes: €5, €10, €20, €50, €100, €200 and  €500


*.Swiss Franc CHF:  (  1 CHF = 388.1395 NGN  )
Bank note: 10, 20, 50, 100, 200, 1000 francs
Coins: 5, 10 and 20 Rp/cts, 1/2, 1, 2 and 5 Fracs


*.United State Dollar USD: (  1 USD = 360.5000 NGN   )
Bank note: $1, $2, $5, $10, $20, $50, $100
Coins: 1C, 5C, 10C, $1/4, $1/2, $1.




Go back to the list once again and check what's the highest denominations of each currency (and population of users of each currency), You will discover that the top performing currency do not have high face value like we have 500 NGN and 1,000 NGN in Nigeria.

Also, you will notice that the top performing currencies have coins form of currency with denomination of very low face value.

The highest of the denominaton is 1000 Franc followed by 500 EUR. 1000 Franc is not in frequent use and the highest Franc denomination next to it is 200 Frank ( not like 500 NGN as we have here in nigeria ). Also the use of 500 EUR will discontinue this year 2018.

Get a hold on history of exchange rate in Nigerian, you will find out that every introduction of new high denomination currency note has averse advese effect on it.


Why High Denominational Currency Note Is Bad:
1. Increase in prints of currency notes with high face value e.g 1000 NGN makes other lower currency of less important and less usefull. This can gradually lead to upgrade of price of goods and services in market.

2. It makes stealing and loothing of cash easier as larger amount of money value can be packed into a very small space.

Why do CBN currently print more high denominational currency alone? Methink its in a bid to enhance hoarding of cash against the comming 2019 general election.

3. 500 NGN and 1000 NGN are no money for the common man, go to the market and examine what denomination are most in use.

4. It's in a way opposing the cashless policy by the federal government of Nigeria.


What The Wise Nations Did:
1. United State of Ameria used to have $500, $1000, $2000 currency notes until December 14, 1945, when the high denominational bills were last printed and officially discontinued on July 14, 1969 by the Federal Reserve System.

2. Europian Central Bank announced on 4 May, 2016 that it would phase out the 500 Euro notes by the end of 2018.



Other Factors That May Affect The Exchange Rate Of A Currency Include:
1. Ratio of goods/services importation to exportation

2. Availability of currency and number of complying users.

The Illegal illegal printing of currency by the CBN according to as reported by some news media outlets has a long way to desctroy value on our cash.

3. Inflation rate

4. Government debts and federal reserve.

5. Political policies and stability

6. And many more



My Recomendations:
Nigerian government should permanently discontinue and remove 500 NGN and 1,000 NGN currency notes from circulation. Reintroduction of 50 Kobo, 1 NGN and 2 NGN coins should also be done.

A serious government fighting corruption will yield to my advice as abundance of lower denomination currency will discourage looters from hoading and keeping cash in a safe instead of bank.

Caveat emptor:
This writeup is a personal opinion resulting from my many observations. It is not a scholarly work and should not be treated as one. Copy-and-paste bloggers should please reference the link and author of the article.

Good, makes sense. I knew this would make front page eventually. Shout out to all those aspiring to be FTC.........your time will come eventually, keep faith

This is a very simple truth and need to be put into consideration.

Money is a value created in our mind and ascribe to currency notes and coins.

These currencies in themselves have no value except for the values we created in our mind for them.



Edited:
To those economics and financial Gurus calling me names and miscontruing my writeup, you are weldone!

Maybe you people need to read my write up again and consider what you wrote in your comments.

Everybody is contributing their opinion here to find a way forward for the Nigeria economy, some people are here derailing the thread with their You-are-not-an-expert comments.




Edited: You can also check this:

Update: 1 NGN to 1 USD Secret: Interesting Policy Proposed by CBN
https://www.nairaland.com/4355615/update-1-ngn-1-usd

there's no 100 naira right now and things hasn't changed, the CBN has silently withdrawn 100 naira in case you guys don't Kno.

Hmmm

Samleen:
This is a very simple truth and need to be put into consideration.

Money is a value created in our mind and ascribe to currency notes and coins.

These currencies in themselves have no value except for the values we created in our mind for them.

soludo proposed this during the last tenure of OBJ, it was already announced but the whole senators and Reps kicked against it

bloodmoneyspita:
there's no 100 naira right now and things hasn't changed, the CBN has silently withdrawn 100 naira in case you guys don't Kno.

You can only find few worn out 100 naira notes in circulation now

seunlayi:
soludo proposed this during the last tenure of OBJ, it was already announced but the whole senators and Reps kicked against it

he didn't promote it during the tenure of OBJ,but during the tenure of yaradua.

Even if we do all wat the op says,the naira will still lose value against the us dollar cause of our weak economy.

Ghana did it,and it has not really change anything

Exactly 10 years ago, someone in the CBN wanted to do something similar but the economic blockheads ruling us frustrated it.

http://www.cbn.gov.ng/redenomination/newpolicy.asp

Omololu2121:
he didn't promote it during the tenure of OBJ,but during the tenure of yaradua.

Even if we do all wat the op says,the naira will still lose value against the us dollar cause of our weak economy.

Ghana did it,and it has not really change anything

Ghana currency GHS ( 1 GHS = 80.4096 NGN )
Banknotes GH₵1, 2, 5, 10, 20, 50
Coins 1, 5, 10, 20, 50Gp, GH₵1

what's the excuse? Ghana currency is still performing better than wht we have here in Nigeria


compare this:

1 USD = 4.4770 GHS vs

1 USD = 360.500 NGN

seunlayi:
soludo proposed this during the last tenure of OBJ, it was already announced but the whole senators and Reps kicked against it

EXACTLY! He proposed the DEVALUATION OF CURRENCY back then, But they (useless people) kick against it for their selfish interest.

Samleen:


Ghana currency GHS ( 1 GHS = 80.4096 NGN )
Banknotes GH₵1, 2, 5, 10, 20, 50
Coins 1, 5, 10, 20, 50Gp, GH₵1

what's the excuse. Ghana currency is still performing better than wht we have here in Nigeria


compare this:

1 USD = 4.4770 GHS vs

1 USD = 360.500 NGN

don't forget that
[/b]1 USD=1 GHS before[b]

Samleen:
*If government can stop the printing 500 NGN notes and 1,000 NGN notes and officially discontinue its use!

*Reintroduction of Nigeria coins, 50Kobo, 1 NGN and 2 NGN.



Welcome, lets get started by examinining the top 10 performing currencies in the world to gain necessary insights before drawing our conclusions.

*.Kuwait Dinar KWD:  (  1 KWD = 1201.9611 NGN  )
Bank notes: 1/4, 1/2, 1, 5, 10, 20 Dinars
Coins: 5, 10, 20, 50, 100, 200 Fils


*.Bahraini Dinar BHD: (  1 BHD = 956.3254 NGN   )
Bank note: BD 1/2, BD 1, BD 5, BD 10, BD 20
Coins: 5, 10, 25, 50, 100 Fils, BD 1/2


*.Omani Rial OMR: (  1 OMR = 936.2906 NGN  )
Bank note: 1/2, 1, 5, 10, 20, 50 Rials
Coin: 50, 10, 20, 50, 100 baisa and rarely used 200 biasa


*.Jordanian Dinar JDD:  (  1 JDD = 507,65070 NGN  )
Bank notes: 1, 5, 10, 20, 50, Dinars
Coins: 1/2, 1, quirsh, 21/2, 5, 10 Piastras


*.British Pound GBP:  (   1 GBP = 504.8154 NGN   )
Bank notes: €5, €10, €20, €50
Coins: 1P, 2P, 5P, 10P, 50P, €1, €2


*.Caymanian Dollar KYD:  (  1 KYD = 432.7622 NGN   )
Bank notes: 1, 5, 10, 25, 50, 100 Dollars
Coin: 1, 5, 10, 25 Cents


*.Euro EUR:  (  1 EUR = 448.2926 NGN  )
Bank notes: €5, €10, €20, €50, €100, €200 and  €500


*.Swiss Franc CHF:  (  1 CHF = 388.1395 NGN  )
Bank note: 10, 20, 50, 100, 200, 1000 francs
Coins: 5, 10 and 20 Rp/cts, 1/2, 1, 2 and 5 Fracs


*.United State Dollar USD: (  1 USD = 360.5000 NGN   )
Bank note: $1, $2, $5, $10, $20, $50, $100
Coins: 1C, 5C, 10C, $1/4, $1/2, $1.




Go back to the list once again and check what's the highest denominations of each currency (and population of users of each currency), You will discover that the top performing currency do not have high face value like we have 500 NGN and 1,000 NGN in Nigeria.

Also, you will notice that the top performing currencies have coins form of currency with denomination of very low face value.

The highest of the denominaton is 1000 Franc followed by 500 EUR. 1000 Franc is not in frequent use and the highest Franc denomination next to it is 200 Frank ( not like 500 NGN as we have here in nigeria ). Also the use of 500 EUR will discontinue this year 2018.

Get a hold on history of exchange rate in Nigerian, you will find out that every introduction of new high denomination currency note has averse advese effect on it.


Why High Denominational Currency Note Is Bad:
1. Increase in prints of currency notes with high face value e.g 1000 NGN makes other lower currency of less important and less usefull. This can gradually lead to upgrade of price of goods and services in market.

2. It makes stealing and loothing of cash easier as larger amount of money value can be packed into a very small space.

Why do CBN currently print more high denominational currency alone? Methink its in a bid to enhance hoarding of cash against the comming 2019 general election.

3. 500 NGN and 1000 NGN are no money for the common man, go to the market and examine what denomination are most in use.

4. It's in a way opposing the cashless policy by the federal government of Nigeria.


What The Wise Nations Did:
1. United State of Ameria used to have $500, $1000, $2000 currency notes until December 14, 1945, when the high denominational bills were last printed and officially discontinued on July 14, 1969 by the Federal Reserve System.

2. Europian Central Bank announced on 4 May, 2016 that it would phase out the 500 Euro notes by the end of 2018.



Other Factors That May Affect The Exchange Rate Of A Currency Include:
1. Ratio of goods/services importation to exportation

2. Availability of currency and number of complying users.

The Illegal illegal printing of currency by the CBN according to as reported by some news media outlets has a long way to desctroy value on our cash.

3. Inflation rate

4. Government debts and federal reserve.

5. Political policies and stability

6. And many more



My Recomendations:
Nigerian government should permanently discontinue and remove 500 NGN and 1,000 NGN currency notes from circulation. Reintroduction of 50 Kobo, 1 NGN and 2 NGN coins should also be done.

A serious government fighting corruption will yield to my advice as abundance of lower denomination currency will discourage looters from hoading and keeping cash in a safe instead of bank.

Caveat emptor:
This writeup is a personal opinion resulting from my many observations. It is not a scholarly work and should not be treated as one. Copy-and-paste bloggers should please reference the link and author of the article.

I do not agree. It will only limit looting but it will have no effect on the exchange rate. The countries you made references to didn't have a terrible economy like Nigeria does.

The major reason why out currency is low in values is because Nigeria is not a producing country. We import virtually everything.

If we want our currency value to appreciate, what we should do is;

1. Ensure all our refineries are working. It will save us lots of foreign exchange.

2. We need an industrial revolution.

3. We need to invest more in Agriculture.

4. Every local government chairman should be productive rather than administrative.

5. Corruption should be punished.

6. Our tax system should be made more effective.

7. Out railway should be developed to reduce cost of transportation of food items.

8. Our borders should be closed. If possible, fence the country round.

Export should exceed import if our currency must appreciate. After all these is done, then we can take away the high currency notes.

Ken4Christ:


I do not agree. It will only limit looting but it will have no effect on the exchange rate. The countries you made references to didn't have a terrible economy like Nigeria does.

The major reason why out currency is low in values is because Nigeria is not a producing country. We import virtually everything.

If we want our currency value to appreciate, what we should do is;

1. Ensure all our refineries are working. It will save us lots of foreign exchange. (This is what Buhari could used his 4yrs for. Fix the Oil sector here in Nigeria then you'll see power station finding it less stressful to fuel and gas there machines, upcoming Enterprenuers will flourish and the existing ones will be bigger.

2. We need an industrial revolution. No 1 will play a greater role here. chase aways all those greedy office holders milking and making business a living hell for Business people with there erroneous Investment and Business strategies that must be abided by. The youths should should also engage more of their hand and brain than there certificate. Certificate has killed us in this country. Oversabi wey no sabi.

3. We need to invest more in Agriculture. Good! but Buhari has failed to stop his brother from crippling this sector with their cows, machetes and AK47. Unemployed PubAdmin Sola does not want to farm, Zoologist Chima finds it disgusting to be in the farm, even Agric Engr Vivian calls it a man's job and lowlife dirty business, she rather slays on Fb, Insta and react on Twitter.

4. Every local government chairman should be productive rather than administrative.
Those ones shouldn't exist at all. The productivity should cut across different office whether high or low even the Presido. Anyway nothing can be said about your President.

5. Corruption should be punished.
This is called impossible tense. Yes it's the biggest challenge in Nigeria but the only way to curb it is to bring in a futuristic youth Leader with a new set of government officials and many greedy constitutions are reviewed too.

6. Our tax system should be made more effective. If we can regulate the business sector well, organize it and create a conducive environment for small, medium and high scale businesses, then the tax we'll be generating in this country will shock Africa and the world. Again! put tax payers money to good use too.

7. Out railway should be developed to reduce cost of transportation of food items. Good! Railways and special Agricultural transportation system. Totally stop to the movements of the Fulani herdsmen.

8. Our borders should be closed. If possible, fence the country round. that's good too. At least all those Chad and Niger Republic should defuse with there ancestral brothers (Buhari family) to terrorize our people. Ban contraband from entering this country, courtesy of the Igbos and some few Afonjas.

Export should exceed import if our currency must appreciate. After all these is done, then we can take away the high currency notes.
Meetings should be held with the Ipobians and some few Oduduwa citizens on how to reduce excess importation thereby throwing away our $$$$.

God help us

Like what Ken4Christ said, even if the government stops printing higher denominations, that would not make the naira strong.

What can make the naira strong is if its purchasing power increases. There are more than one factor that increases the purchasing power of a currency but one of the major factors is increase in the productivity level of the country. In simple terms if the productivity level of a country increases, the demand for money will increase thereby causing prices within the country to fall and the purchasing power of the money to increase but this is only valid if the supply of money does not increase.

So even if the government removes 1000 naira from the system but they continue printing 100 naira like say na water, that would not stop the person in the market from charging 15,000 naira from me, it would only mean i would have to carry a lot of 100 naira with me.

But imagine if it becomes alot easier and more profitable to grow rice in Nigeria(by government initiative,technology etc), more people will start growing rice, also if the price of the nylon that they use to package the rice reduces because of increase in nylon manufacturing and also if the cost of transportation of the rice from the farm to the city is reduced because of reduction in fuel cost etc, eventually all this cost reduction will reduce the cost of a bag of rice in the market to lets say 4000 naira. Now if all other production of goods and services increase like this and the government stops printing money like say tomorrow no dey and no one person is given monopoly over any particular industry,then generally the overall price of things will fall, which means you will need less money to buy things. If you dey use 500 naira to buy plate of rice before, because of the general fall in price that 50 naira wey no fit buy you better pomo before go fit buy you full plate now. Its value(Purchasing power) has increased, so you won't even need to carry around 1000 naira in your pocket because it will be too much thereby making the need for 1000 note obsolete.

In terms of the exchange rate of the currency , there are a lot of factors to consider like economic growth,political stability, debt level, interest rate etc. But i believe it all starts with economic growth as i tried to explain earlier because remember our modern currency has no value on its own, its value comes from how people much people trust it's government and its economy. Ghana's currency is better because investors believe ghana's economy is better and alot stabler than ours. If not for the oil and other potentials wey we get, with all the rubbish wey our government dey do since, our currency suppose don worse pass Zimbabwe own by now. But we thank God.

So bros I believe first things first, we need to increase our productivity level to cater for our needs(which will reduce unnecessary excessive importation) and also boost our exports.

Just my opinion but I stand to be corrected

omokoladejames:
Like what Ken4Christ said, even if the government stops printing higher denominations, that would not make the naira strong.

What can make the naira strong is if its purchasing power increases. There are more than one factor that increases the purchasing power of a currency but one of the major factors is increase in the productivity level of the country. In simple terms if the productivity level of a country increases, the demand for money will increase thereby causing prices within the country to fall and the purchasing power of the money to increase but this is only valid if the supply of money does not increase.

So even if the government removes 1000 naira from the system but they continue printing 100 naira like say na water, that would not stop the person in the market from charging 15,000 naira from me, it would only mean i would have to carry a lot of 100 naira with me.

But imagine if it becomes alot easier and more profitable to grow rice in Nigeria(by government initiative,technology etc), more people will growing rice, also if the price of the nylon that they use to package the rice reduces because of of increase in nylon manufacturing and also if the cost of transportation of the rice from the farm to the city is reduced because of reduction in fuel cost etc, eventually all this cost reduction will reduce the cost of a bag of rice in the market to lets say 4000 naira. Now if all other production of goods and services increase like this and the government stops printing money like say tomorrow no dey and also no one person is given monopoly over any particular industry,then generally the overall price of things will fall, which will you will need less money to buy things. If you dey use 500 naira to buy plate of rice before, because of the general fall in price that 50 naira wey no fit buy you better pomo before go fit buy you full plate now. Its value(Purchasing power) has increased, so you won't even need to carry around 1000 naira in your pocket because it will be too much thereby making the need for 1000 note obsolete.

In terms of the exchange rate of the currency , there are a lot of factors to consider like economic growth,political stability, debt level, interest rate etc. But i believe it all starts with economic growth as i tried to explain earlier because remember our modern currency has no value on its own, its value comes from how people much people trust it's government and its economy. Ghana's currency is better because investors ghana's economy to be better and alot stabler than ours. If not for the oil and other potentials wey we get, with all the rubbish wey our government dey do since, our currency suppose don worse pass Zimbabwe own sef. But we thank God.

So bros I believe first things first, we need to increase our productivity level to cater for our needs(which will reduce unnecessary excessive importation) and also for export.

Just my opinion but I stand to be corrected

You raised some points too but

What I wrote up there is just a basic truth!

Ok, why do other african countries with poorer socio-political and business development have better performing currency than what we have here in Nigeria?

Okay

Send this to Asorock

Ken4Christ:


I do not agree. It will only limit looting but it will have no effect on the exchange rate. The countries you made references to didn't have a terrible economy like Nigeria does.

The major reason why out currency is low in values is because Nigeria is not a producing country. We import virtually everything.

If we want our currency value to appreciate, what we should do is;

1. Ensure all our refineries are working. It will save us lots of foreign exchange.

2. We need an industrial revolution.

3. We need to invest more in Agriculture.

4. Every local government chairman should be productive rather than administrative.

5. Corruption should be punished.

6. Our tax system should be made more effective.

7. Out railway should be developed to reduce cost of transportation of food items.

8. Our borders should be closed. If possible, fence the country round.

Export should exceed import if our currency must appreciate. After all these is done, then we can take away the high currency notes.

Sir, your opinion is good, and will make naira to perform even much more better than the USD and maybe be one of the first best three performing currency in the world but

Forget about this posibility without the discontinuation of use of 500 and 1000 and reintroduction of 50 Kobo, 1 NGN, 2 NGN and if possible 10 Kobo, 20 Kobo.

This is the first thing to do.

They can do it, but because of what they want to see they won't discontinue the high denominations.

my broda forget this mathematics, the naira will never be 1 with the dollar. .beside, the gov't will never stop the printing of N500 and N1000 notes, instead they are planning to introduce N5000 notes...what hv they done about the lower coins, nothing! until a determined gov't comes in, Nigeria will never be same again...

This idea was introduced be Professor Charles C. Soludo in 2006, when our old coins were re-introduced. If the idea wasn't killed by our greedy incompetent, and myopic leaders, the Nigerian Naira will be carrying more value today.
Even the so-called learned Sanusi was planning to introduce N5000 note.

Op I don't know where you got your statistics from that those are the top performing currency.



It may interest you to note that the three top performing currency is USD, EURO & JAPAN YEN


Note that Japan highest currency is 10,000Yen but, their currency is d 3rd performing currency.



It may also interest you to know that ¥1 #1 but the value of ¥1 is bigger than #1



For example, in Japan, one jean trouser is ¥150 where as in Nigeria, one jean trouser is #3000



Are you getting it now? where as ¥1 = #1



What the government needs to do are:



1, Increase export and reduce import


2, Increase foreign reserve

3, We shouldn't be import dependent


4, Put qualified person as CBN Governor, Minister of Finance & Minister of Budget


If the above are done, I can assure you that your Naira will have value again but if your government fail to do the above & choose to redenominate the naira to probably remove #500 & #1000 and introduce coin without the above, the currency will still fall back to where it was

fados4sure:
Op I don't know where you got your statistics from that those are the top performing currency.

It may interest you to note that the three top performing currency is USD, EURO & JAPAN YEN

Note that Japan highest currency is 10,000Yen but, their currency is d 3rd performing currency.

It may also interest you to know that ¥1 #1 but the value of ¥1 is bigger than #1

For example, in Japan, one jean trouser is ¥150 where as in Nigeria, one jean trouser is #3000

Are you getting it now? where as ¥1 = #1

What the government needs to do are:

1, Increase export and reduce import

2, Increase foreign reserve

3, We shouldn't be import dependent

4, Put qualified person as CBN Governor, Minister of Finance & Minister of Budget

If the above are done, I can assure you that your Naira will have value again but if your government fail to do the above & choose to redenominate the naira to probably remove #500 & #1000 and introduce coin without the above, the currency will still fall back to where it was

Japanish Yen JPY  (  1 JPY = 3.4020 NGN  )
Banknotes ¥1000, ¥2000, ¥5000, ¥10,000
Coins ¥1, ¥5, ¥10, ¥50, ¥100, ¥500



 1 USD = 105.8455 JPY

Sir, alway check your facts before you make your comments.



When did the poor performing NGN become a stardard of measure of performance for other currency?

If 1JPY = 1 NGN, like you wrote, then the both currencies are poor performing and you should retract your statement of classifying Japanish Yen as part of top performing currencies in the world.

The only point you have is the import/export ratio which has helped the Japanish Yen to perform better than the NGN. It in a way nullify the effect of presence of the high face value e.g. 10,000 JYP currency Notes.

bloodmoneyspita:
there's no 100 naira right now and things hasn't changed, the CBN has silently withdrawn 100 naira in case you guys don't Kno.

Little wonder the 100 naira notes we come across these days looks like " the present economy situation of the country"!

Samleen:
This is a very simple truth and need to be put into consideration.

Money is a value created in our mind and ascribe to currency notes and coins.

These currencies in themselves have no value except for the values we created in our mind for them.

I have always said this

@OP, you are erroneously comparing currency strength based on their nominal value. Nothing could be further from the truth. Currency value is determined by their purchasing power, which is a reflection of the overall health of the economy.
---
Are you suggesting that the Ghanaian Cedi is more valuable than the Japanese Yen, simply because it has a lower comparative nominal value?
---
Higher denominations do not cause a currency to weaken, but rather weak currencies (with low purchasing power) causes the need for higher denominations. Solve the weak currency and the need for higher denominations disappears. You solve the problem of weak currency by increasing productivity, having a positive trade balance (export more than imports), etc.

Thanks Op!

But what would have happened, if the proposed#5k denomination during the GEJ administration was successful?

Bevista:
@OP, you are erroneously comparing currency strength based based on their numerical value. Nothing could be further from the truth. Currency value is determined by their purchasing power, which is a reflection of the overall health of the economy.
---
Are you suggesting that the Ghanaian Cedi is more valuable than the Japanese Yen, simply because it has a lower comparative numerical value?
---
Higher denominations do not cause a currency to weaken, but rather weak currencies (with low purchasing power) causes the need for higher denominations. Solve the weak currency and the need for higher denominations disappears. You solve the problem of weak currency by increasing productivity, having a positive trade balance (export more than imports), etc.

Sir/ma, you're mixing things up here and I wouldn't like you to miscontrue my opinion to what I have not intended.


Go back up the topic and read my writeup again. I have not at any time oppose the idea of increased productivities and positive trade balance (export more than import) as part of contributory factor for a currency to perform.


Can our 1000 NGN purchase the same product worth 1000 USD ? No!


The worth of a currency note is not in its numerical face value like I've already written.


Get this fact straight, once, and for all:
1GHC = 23.6723 JPY  and you know what this may mean when converting currency for your international purchases.

Locally, Japanish JPY may have great value but what about internationally?

omokoladejames:
Like what Ken4Christ said, even if the government stops printing higher denominations, that would not make the naira strong.

What can make the naira strong is if its purchasing power increases. There are more than one factor that increases the purchasing power of a currency but one of the major factors is increase in the productivity level of the country. In simple terms if the productivity level of a country increases, the demand for money will increase thereby causing prices within the country to fall and the purchasing power of the money to increase but this is only valid if the supply of money does not increase.

So even if the government removes 1000 naira from the system but they continue printing 100 naira like say na water, that would not stop the person in the market from charging 15,000 naira from me, it would only mean i would have to carry a lot of 100 naira with me.

But imagine if it becomes alot easier and more profitable to grow rice in Nigeria(by government initiative,technology etc), more people will growing rice, also if the price of the nylon that they use to package the rice reduces because of of increase in nylon manufacturing and also if the cost of transportation of the rice from the farm to the city is reduced because of reduction in fuel cost etc, eventually all this cost reduction will reduce the cost of a bag of rice in the market to lets say 4000 naira. Now if all other production of goods and services increase like this and the government stops printing money like say tomorrow no dey and also no one person is given monopoly over any particular industry,then generally the overall price of things will fall, which will you will need less money to buy things. If you dey use 500 naira to buy plate of rice before, because of the general fall in price that 50 naira wey no fit buy you better pomo before go fit buy you full plate now. Its value(Purchasing power) has increased, so you won't even need to carry around 1000 naira in your pocket because it will be too much thereby making the need for 1000 note obsolete.

In terms of the exchange rate of the currency , there are a lot of factors to consider like economic growth,political stability, debt level, interest rate etc. But i believe it all starts with economic growth as i tried to explain earlier because remember our modern currency has no value on its own, its value comes from how people much people trust it's government and its economy. Ghana's currency is better because investors ghana's economy to be better and alot stabler than ours. If not for the oil and other potentials wey we get, with all the rubbish wey our government dey do since, our currency suppose don worse pass Zimbabwe own sef. But we thank God.

So bros I believe first things first, we need to increase our productivity level to cater for our needs(which will reduce unnecessary excessive importation) and also for export.

Just my opinion but I stand to be corrected

Bros, am a macro economist and I agree perfectly with your opinion. You are well-learned! To add to your point, it is supply and demand forces and deregulation of production or of supplies that create equilibrium. If $1 will be equal to N1 then the amount of $ available or supplied to the Nigerian economy via either Foreign direct investments (FDI) or forex earnings from exportation of products and services demanded by international markets must be at equilibrium with the indices of Nigeria's export-led industrialization or export oriented production.

The higher our export oriented product the more $ will be supplied to purchase these exportable goods and the lesser the exchange rate, Naira gets stronger, more employment is created, GDP increases, and the economy gets all better ...its a chain reaction! The Goverment's part is to provide favourable policies, incentives to production, provide financing platforms and enlighten the masses.

rajiraymond:
Thanks Op!

But what would have happened, if the proposed#5k denomination during the GEJ administration was successful?

You are welcome,

To your question: inflation rate will increase, NGN will lose it foreign exchange value and corrupt politicians will be able to hoard more public fund for their selfish use.

omokoladejames:
Like what Ken4Christ said, even if the government stops printing higher denominations, that would not make the naira strong.

What can make the naira strong is if its purchasing power increases. There are more than one factor that increases the purchasing power of a currency but one of the major factors is increase in the productivity level of the country. In simple terms if the productivity level of a country increases, the demand for money will increase thereby causing prices within the country to fall and the purchasing power of the money to increase but this is only valid if the supply of money does not increase.

So even if the government removes 1000 naira from the system but they continue printing 100 naira like say na water, that would not stop the person in the market from charging 15,000 naira from me, it would only mean i would have to carry a lot of 100 naira with me.

But imagine if it becomes alot easier and more profitable to grow rice in Nigeria(by government initiative,technology etc), more people will growing rice, also if the price of the nylon that they use to package the rice reduces because of of increase in nylon manufacturing and also if the cost of transportation of the rice from the farm to the city is reduced because of reduction in fuel cost etc, eventually all this cost reduction will reduce the cost of a bag of rice in the market to lets say 4000 naira. Now if all other production of goods and services increase like this and the government stops printing money like say tomorrow no dey and also no one person is given monopoly over any particular industry,then generally the overall price of things will fall, which will you will need less money to buy things. If you dey use 500 naira to buy plate of rice before, because of the general fall in price that 50 naira wey no fit buy you better pomo before go fit buy you full plate now. Its value(Purchasing power) has increased, so you won't even need to carry around 1000 naira in your pocket because it will be too much thereby making the need for 1000 note obsolete.

In terms of the exchange rate of the currency , there are a lot of factors to consider like economic growth,political stability, debt level, interest rate etc. But i believe it all starts with economic growth as i tried to explain earlier because remember our modern currency has no value on its own, its value comes from how people much people trust it's government and its economy. Ghana's currency is better because investors ghana's economy to be better and alot stabler than ours. If not for the oil and other potentials wey we get, with all the rubbish wey our government dey do since, our currency suppose don worse pass Zimbabwe own sef. But we thank God.

So bros I believe first things first, we need to increase our productivity level to cater for our needs(which will reduce unnecessary excessive importation) and also for export.

Just my opinion but I stand to be corrected

A very good head you have on your body. Ori e wa'nbe.

Our problem is that most of our elected leaders do not really have what it takes in terms of knowledge of micro and macro economic theories to take the country higher.

Even when they are surrounded by the best brains in the world as Special assistants/advisers who are often mirred in needless bureaucratic arrangements with the largely incompetent civil service, the result is the backward growth we are experiencing as a nation.

Oftentimes, I wonder if our leaders are truly patriotic.

By the way, I learnt somewhere that in most cases, the directors of finance always end up as Permanent secretaries because they usually have access to more than enough funds to grease their ways to the top.

It is also without gainsaying that our worst always find their ways into the civil service.

jaybabs1:


Bros, am a macro economist and I agree perfectly with your opinion. You are well-learned! To add to your point, it is supply and demand forces and deregulation of production or of supplies that create equilibrium. If $1 will be equal to N1 then the amount of $ available or supplied to the Nigerian economy via either Foreign direct investments (FDI) or forex earnings from exportation of products and services demanded by international markets must be at equilibrium with the indices of Nigeria's export-led industrialization or export oriented production.

The higher our export oriented product the more $ will be supplied to purchase these exportable goods and the lesser the exchange rate, Naira gets stronger, more employment is created, GDP increases, and the economy gets all better ...its a chain reaction! The Goverment's part is to provide favourable policies, incentives to production, provide financing platforms and enlighten the masses.

Every contributor to this topic are raising important points of which a serious government will consider to take us out of the present mess.