Experts have expressed divergent views on the deliberate devaluation of the naira by the Central Bank of Nigeria to maintain internal and external balance of the economy.

While some observed that this action, which the CBN said was a “deliberate and strategic” move aimed at saving the economy from an impending financial crisis, would not be effective at this point in time, others said that the adjustment could not have come at a better time.

A retired professor of economics, Kayode Familoni, who spoke with our correspondent in a telephone interview on Monday, said although the devaluation had its benefits in the face of the current global crisis, it might not be effective as a deliberate policy weapon for Nigeria at present.

Familoni, formerly of the Department of Economics, University of Lagos, said before naira devaluation could be effective as a deliberate policy weapon, the country’s non-oil products much contribute more to the Gross Domestic Product.

“Before that policy can work, the non-oil sector must be significant, which at present, is not the case in Nigeria. The price regime in the oil sector is exogenously determined, it is not controlled by the country,” he explained.

“When we devalue, our domestic products become more attractive to foreigners, but right now, the non-oil sector is relatively weak,” he added.

But the Chief Executive Officer, Financial Derivates, Mr. Bismarck Rewane, said the devaluation is a necessity at this time because of the continuous fall of oil prices.

Speaking in a telephone interview with our correspondent, Rewane noted that the country currently had a financing gap, which necessitated a prompt adjustment.

Governor of the CBN, Prof. Charles Soludo had told the Senate, while explaining the continued depreciation of the naira against the United States dollar, and other foreign currencies, that the process of devaluing the naira was “carefully thought through and deliberately implemented” to maintain an internal and external balance for the economy.

He said the crash of crude prices in the international market due to the global financial crisis had adversely affected foreign earnings and inflows into the Nigerian economy.

While explaining that this had implications for the nation’s balance of payments, Soludo said, “Every country that experiences this has two options –you either allow the prices to adjust by way of exchange rate or quantities would adjust”.

On the effect of the falling value of the naira on inflation rate, Familoni said if the value of the naira fell vis-à-vis other foreign currencies, then foreign goods and services would be relatively more expensive than domestic goods and services.

He noted that this meant that the country would be importing at higher prices, adding that “given the home price regime, the imported price regime is higher. And some of these imported goods serve as intermediate or finished goods”.

This, he said, automatically increased the prices of goods and services in Nigeria, which meant there would be higher inflation.

However, while agreeing that such effects could follow the lower value of the naira, Rewane said, “You cannot make omelette without breaking eggs”.

“There is no perfect world. Some things must give. If there is inflation, it can be managed,” he argued.

The naira, which recorded some stability in the last three years, has crashed continuously from N117 to about N138 to the dollar in the past five weeks.

The development prompted the closure of the foreign exchange market for two consecutive days shortly before the Muslim Eid el Kabir festival.