Nigerian naira devaluation prompts investors to flock to Bitcoin

Introduction: Nigeria's central bank will devalue the naira next week, a move that could prompt a rush to bitcoin as an alternative investment. Centralized monetary policy is inherently flawed, and this reflects the problems in the financial framework built by many governments...

Nigeria’s central bank will devalue the naira next week, a move that could prompt a rush to bitcoin as an alternative investment.

Centralized monetary policy is inherently flawed, as evidenced by the problems with government-built financial frameworks in a number of countries, including Greece, Venezuela, and China.

Nigeria is now experiencing the same economic problems as it has seen a drop in crude oil exports following international conflict. In the current economic system, most international trade is conducted in the reserve currency, the US dollar. However, imports and exports are vital to a country's economic growth, and the value of the domestic currency against the reserve currency determines the country's ability to trade smoothly.

According to many reports recently, the Central Bank of Nigeria is reportedly planning to devalue the country's currency, the Naira. The Naira was previously pegged at 199 to the dollar, but the price of the Naira has plummeted by 100 points in recent times. The actual value of the Naira is now around 280 to 300 to the dollar, while the black market price is around 370 to the dollar. The Nigerian government announced yesterday that the value of the country's legal tender will be driven by the market as the bank intends to get rid of the 16-month-long fixed exchange rate between the Naira and the dollar.

Depreciating Naira Could Send Investors Flocking to Bitcoin

Once the market exchange rate is removed on Monday, the value of the naira will plummet on international forex platforms. The central bank’s intention behind this is to prevent the rapid depletion of the country’s foreign exchange reserves. This move may initially cause panic among investors as their investments will be reduced by half. We can expect these investors to invest in Bitcoin before the new development policy takes effect.

By investing in Bitcoin at the recent exchange rate of 199 Naira to 1 USD, investors can reduce losses if the Naira depreciates, thereby effectively protecting their assets.