Why the depreciation of Naira causes increasing goods prices

The depreciation of the Naira, Nigeria's currency, has multifaceted consequences. Imported goods become more expensive, leading to higher inflation and reduced purchasing power for consumers. Businesses reliant on imported materials face increased costs, potentially driving up prices or reducing profit margins. Foreign debt servicing becomes more burdensome, straining government finances. The depreciation may also deter foreign investment, as returns in local currency diminish. Conversely, exports might become more competitive globally, potentially boosting local industries. However, overall economic instability can result, impacting economic growth and exacerbating poverty and unemployment, thereby creating a complex cycle of economic challenges.