Redenomination of Naira: A Strategy for Inflationary Reduction

Abstract

The paper examined redenomination of naira currency as a strategy for reducing inflation rate in Nigeria. The pressure of currency devaluation mounted on the developing nation’s currency by the developed nations as a condition for loans and grants in the past drastically reduced the value of their currency which in turn increase inflationary pressure on the developing economies. To obtain Nigerians view on redenomination of the naira, the study used Primary data source of data collection to collect data from Nigerians who understands what redenomination is all about. Questionnaire was distributed to 153 respondents. The data obtained from them was analyzed using simple percentage method. The study found that redenomination of naira can reduce inflation rate, improve the value of naira and can be used by CBN to reduce the quantity of money in circulation. The study recommends that Nigerian government should reconsider her stand on the suspension of redenomination of naira as proposed by the CBN in 2007 so as to reduce inflationary pressure mounted on the value of the naira and the economy by the devastated effect of covid-19, government should make concerted effort to stabilize the value of the naira by introducing economic recovery reforms such as support to small and medium enterprises, provision of infrastructure, job creation, export promotion and creating enabling environment for economy to grow and that implementation of redenomination has to be done in a way that its associated uncertainties and instabilities are minimized and macro-economic benefits maximized.