Off Economic phenomenon.

[Bitco55]

Good day everyone.
Where I come from, there's been harsh economic problems for a while now. It's no news, that there's a global inflation due to a few reasons, but even in the midst of all that, a lot of countries are still doing better than others, and the development rate isn't reducing as the standard of living is still by far well to do.

My country has been battling with the dollar exchange rates. It's been soaring high, making the prices of food and other commodities soar high as well. But recently, the exchange rates dropped by over 37%, and everyone became happy ( of course apart from those who earned in $), and the prices of goods and services even went higher, further decreasing the standard of living in the country.

Now, AI and search engines will only try to give me theoretically logical explanations, but I want something practical and out of experience from people of other countries. What do you think this Economic phenomenon is and what exactly is causing it? Has your country been in a situation like this throughout it's history, and how was it resolved? 

[1714562652]

1714562652

[1714562652]

1714562652

[1714562652]

1714562652

[Alphakilo]

Economic explanations for recession and inflation in a country is different. However there are generic explanations for these issues.

I think that when there is a poor economic policy and implementations.

Also, incompetent leadership of the country and corruption.

Thirdly, more imports and non export.

Fourth, insecurity could also lead to it. It will make people scared of going out to do their business.

Fifth, interference from foreign bodies. When foreign bodies interfes in the economy of a country, they bring in their own solution instead of a local solution that will work locally.

Solutions
* Corrupt leaders should be punished
* More indigenous industries should be created and things should be locally produced and consumed. Then they should explore exporting their products outside to other countries.
* Fight insecurity.
* Solutions should be local. What works for the UK may not work for Ghana.

[mu_enrico]

My country has been battling with the dollar exchange rates. It's been soaring high, making the prices of food and other commodities soar high as well. But recently, the exchange rates dropped by over 37%, and everyone became happy ( of course apart from those who earned in $), and the prices of goods and services even went higher, further decreasing the standard of living in the country.

Correct me if my interpretation is wrong. From this information: (1) the dollar (I assume USD) exchange rate vs local currency went down 37%; (2) even though the USD rate went down, prices (in local currency) still went higher.

IMO, The continuous depreciation of local currency vs USD is a sign of massive inflation of the local currency (compared to the US inflation). Then, The USD exchange rate was intervened by the government so that it went down without the necessary fundamentals to support it. It means the inflation problem still exists. This means prices in local currency will still increase.

So what's the effect of a 37% decrease in the USD exchange rate?
- If goods and services are sourced in USD, then if the USD rates go down, the price of goods and services will go down as well. The problem is that if the goods and services are not sourced in USD then tweaking the exchange rate won't affect local pricing.
- If the government budget can't sustain the USD exchange rate intervention, the exchange rate will come back to the equilibrium price.

[Dunamisx]

Good day everyone.
Where I come from, there's been harsh economic problems for a while now. It's no news, that there's a global inflation due to a few reasons, but even in the midst of all that, a lot of countries are still doing better than others, and the development rate isn't reducing as the standard of living is still by far well to do.

You may not have to depend on the government as well as stop comparing your country to others, you need to be independent on yourself because the government will not be responsible on how you have seen to economy for your own good, create time to find an alternative for yourself in the economy, don't be too dependent, work on yourself to have value and make effective use of these to your own benefits, things have always been that bad ever, but not being too dependent will make every economic conditions sustainable on you.

[davis196]

Good day everyone.
Where I come from, there's been harsh economic problems for a while now. It's no news, that there's a global inflation due to a few reasons, but even in the midst of all that, a lot of countries are still doing better than others, and the development rate isn't reducing as the standard of living is still by far well to do.

My country has been battling with the dollar exchange rates. It's been soaring high, making the prices of food and other commodities soar high as well. But recently, the exchange rates dropped by over 37%, and everyone became happy ( of course apart from those who earned in $), and the prices of goods and services even went higher, further decreasing the standard of living in the country.

Now, AI and search engines will only try to give me theoretically logical explanations, but I want something practical and out of experience from people of other countries. What do you think this Economic phenomenon is and what exactly is causing it? Has your country been in a situation like this throughout it's history, and how was it resolved? 

The global inflation was a thing back in 2022 and 2023. Right now, the inflation isn't truly global, because the average inflation rates in the EU countries are around 2-3%. Maybe the rest of the world is suffering from high inflation, but the inflation in the European Union is pretty low.
I don't know in which country do you live. Turkey? Argentina? Some African country? It seems to me that the merchants in your country use everything as an excuse to raise the prices of goods and services. Maybe there isn't a truly functioning market economy where you live and the markets are controlled by cartels and monopolies. If there was a real competition between the merchants, the prices would go down, when the national currency goes up against the US dollar(this means that the imported goods and raw materials would become cheaper, resulting in cheaper consumer goods).

[Kelward]

This currency devaluation is the same problem that most underdeveloped countries are facing because they have incompetent leaders who have no business being in the helms of affairs, they're so corrupt that they don't care if their economies are crumbling, so far they're enriching themselves. Most of these underdeveloped countries even with natural resources that is supposed to boost their economies still rely on foreign made goods and grants from developed countries to survive, instead of creating enabling environment for businesses to thrive and providing basic amenities like water, electric light and good roads. As long as mediocre and corrupt politicians are still rulling these countries, their currencies will keep depreciating and and turning to shitcurrencies.

[jrrsparkles]

If your country's fiat is doing worse against the dollar means the government is printing more money or the paper money is not accepted for exchanges of other currencies or the reasons could be anything but its not in your control to make any changes that can bring positive effect its in the hands of government to make ways that strengthen the economic structure and further progress.

[Bitco55]

If your country's fiat is doing worse against the dollar means the government is printing more money or the paper money is not accepted for exchanges of other currencies or the reasons could be anything but its not in your control to make any changes that can bring positive effect its in the hands of government to make ways that strengthen the economic structure and further progress.

Maybe I didn't ask the questions properly, or  you probably didn't get me. The question is, can you explain this Economic phenomenon and give countries that had such an experience and what was done in order to stop it. It really doesn't matter if I am the one stopping it, or an NGO, or the the government themselves. Simply what was done to stop it ?

Also, this kind of economy makes it difficult for individual to thrive on their own, what advice would you give to people from my country who are still willing to increase their income regardless of the economy?

[WillyAp]

a lot of countries are still doing better than others, and the development rate isn't reducing as the standard of living is still by far well to do.

There is no logical reason that all countries have to perform equally well.
Each Country has the government it deserves. You have mainly dumb people in your country? Look at the government.
That equation only works in societies where mostly fair elections happen.   

[stompix]

Now, AI and search engines will only try to give me theoretically logical explanations, but I want something practical and out of experience from people of other countries. What do you think this Economic phenomenon is and what exactly is causing it? Has your country been in a situation like this throughout it's history, and how was it resolved? 

It's pretty simple since I saw you're from Nigeria.

Your government runs a budget deficit, so it runs on debt that needs to borrow funds.
Your country runs a trade deficit, which means that you need more hard currency to import than you get from your exports.
So you get the decline in Naira!

Now your CB raised in March the rates by 200 points 24.75%, just as a comparison, The US and EU are at 4,5 and 5,5 South Korea and China at 3.5 and Japan just increased it from -0.1 (yeah minus) to 0.

So just as the fed rising interest rates have strengthened the dollar your own CB rising them has strengthened the naira!

But as long as inflation is still at 31.7% those hikes won't do much.

[Gozie51]

Now, AI and search engines will only try to give me theoretically logical explanations, but I want something practical and out of experience from people of other countries. What do you think this Economic phenomenon is and what exactly is causing it? Has your country been in a situation like this throughout it's history, and how was it resolved? 

AI will give you the answer that will be global phenomenal and that may only be theoritical and also making its solution so. Therefore, these issues are country based and not to be generalized. If government has stylishly caused the exchange rate to reduce then it possibly means they also caused it to increase in the first place. So you are going to look at corruption as a cause and that is why I said it is not global but country based.

Another factor to consider are how are the other economic indices functioning with the policies of government. Exchange rate must have to increase if there is pressure and demand for the major currency for import. This is a point to look at, how proficient is your countries.manufacturing sector and exportation of manufactured products? This is important to consider because forcing exchange rate down is not all but there must have to be good policy for natural growth of the economy and not artificial.

[jrrsparkles]

If your country's fiat is doing worse against the dollar means the government is printing more money or the paper money is not accepted for exchanges of other currencies or the reasons could be anything but its not in your control to make any changes that can bring positive effect its in the hands of government to make ways that strengthen the economic structure and further progress.

Maybe I didn't ask the questions properly, or  you probably didn't get me. The question is, can you explain this Economic phenomenon and give countries that had such an experience and what was done in order to stop it. It really doesn't matter if I am the one stopping it, or an NGO, or the the government themselves. Simply what was done to stop it ?

Also, this kind of economy makes it difficult for individual to thrive on their own, what advice would you give to people from my country who are still willing to increase their income regardless of the economy?

Cuba is one of the country that is facing unstoppable inflation due to the restrictions of US government, it is still on going so it's not possible what they did to stop the crisis but the increase of US dollars into the country helped the crisis a bit that also let the people to get what they wanted with their money but it's not possible for everyone, only who had the money even in the crisis can survive and others just have to stare at the government schemes to run their life.

[|MINER|]

These problems usually affect developing countries more.  A rise in the value of the dollar in developing countries has led to a depreciation of their currency and inflation.  Which has made their public life endangered and causing various problems such as increase in commodity prices.  People spend more than their income.  Inflation seems to be killing off these low-income countries.  They are unable to keep pace with the global market.

[btc78]

Honestly it's hard to pin point just one main or primary cause of an economic recession in a country. It is rather a chain of events leading one to another making the economic situation worse. If there are increase in the price of raw materials and the government not being able to do anything to prevent it it will be soon followed by an inflation period which in turn makes people hold on to their money more in fear of losing money but that will lead to a decrease in consumer thus making businesses suffer and in result will act on cutting employees leading to a loss of jobs. It all depends on a country and their strengths and weaknesses but this is generally how I understand economic recession happen.

[Volimack]

The economic situation would not have been affected by this crisis if there was less corruption. An unbridled trend of corruption has been observed in the last few years. Especially in various government projects repeated increase in project cost various irregularities unlimited corruption have eaten a large part of the growth of the country's economy. If corruption was less then the situation of the country could be different.

[tabas]

Currently, most of the countries are into high inflation and the first world countries are dealing with recession. That's why the decrease in value of your fiat is there if your country is dependent on the value of USD or importing a lot. There's no way to stop inflation but it can be lessened and decreased yearly depending on many factors like as I've said, if your country has always been importing, it's hard to deal with it. But those countries that have food security and not reliant to the oil of other countries, then that means that they're making their own supply and economies for which they can't be affected by the rising factors of importation.

[kentrolla]

This happens when the country is dependent on imports as over importing or importing more than export will cause the issue you have mentioned and if the export is increased the country will see more wealth flowing in thus reducing the inflation as well, you country needs more made in your country product it has to become a manufacturing hub for most of the daily needs and this is possible only when government incentivize some SME businesses and have incubation program for start ups.

This is not possible with corrupt leaders as they should be kicked out in first place to move towards progressiveness. 

[Wiwo]

The exchange rate of naira to dollars is not the course of the economic hardship and the hyke in the price of goods and services within the country,  you should ask yourself this basic questions.

1: is the price of other trading currencies and assets not pricing above the dollars, e.g bitcoin for example is at above $68k+ and yet the United state government is not blaming bitcoin are they?

2: the problem relys much more on export rate against import rates?

Conclusion

Nigeria over dependence on  petroleum and importations of almost everything and low internal production of basic commodities is the major course of the hardship.

Now the naira is appreciating against the United state dollars, but yet the price of goods and services are still skyrocketing on daily basis.

[mindrust]

Dividend paying defensive stocks are the best inflation hedges imo.

First of all, they are defensive. Meaning they make products which people will always need and gonna buy. (Shampoo, toothpaste, toilet paper, water, drugs etc)

2- They can easily raise their prices, adjust them to the inflation rate and still sell their products without any problems. Meaning; they are recession-proof.

3- They pay dividends. Meaning; you’ll always have a cash income regardless of the financial situation in the world. It is important because we live in a cash world.

You can’t fix inflation. Nobody can. It is because these central banks are addicted to printing. However, You can protect yourself from it. It is not rocket science…

If you are not into stocks, buy bitcoin.

[Dr.Bitcoin_Strange]

Now, AI and search engines will only try to give me theoretically logical explanations, but I want something practical and out of experience from people of other countries. What do you think this Economic phenomenon is and what exactly is causing it? Has your country been in a situation like this throughout it's history, and how was it resolved? 

If there are regulations to subsidize the high exchange rate, then there should also be regulations on price control, but In a situation where there are only regulations to reduce rates and the aspect of price control is overlooked by the government, producers, wholesalers, and retailers will definitely sell as they desire. In the open market of retailers, prices might not really be properly managed, but from producers to retailers, if there are regulations for price control, it would help the retailers buy cheaper from their suppliers, which would enable them to sell at a less expensive rate to final consumers. 

So, what I am trying to let you know is that the exchange rate can be reduced, but when nothing is done to control the price of goods and services from the channel of distribution, it definitely will not reduce the price of goods, and the cost of living will not still look satisfying because everything that is needed to heal the inflation a bit has not been attended to.