See Latest Dollar’s Rate Hours After CBN Ordered Embassies To Start Operating In Naira
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The Nigerian currency, Naira, has continued its downward spiral, trading at N1, 510 to a dollar at the parallel market and N1, 466, 31 at the official market. This depreciation has been a persistent trend, despite efforts by the Central Bank of Nigeria (CBN) to stabilize the currency.
The CBN had previously supplied dollars to Bureau De Change (BDC) operators to boost liquidity in the market, but the demand for dollars has continued to outstrip supply, leading to a further depreciation of the Naira.
The dollar-to- Naira exchange rate has increased by N40 between Thursday and Friday, a significant jump that has caused concern among citizens and businesses.
The Naira has been experiencing a supply and demand imbalance, with a confidence issue also playing a role. The lack of available dollars has led to a situation where people are willing to pay a premium to get their hands on the scarce currency, further fueling the depreciation.
BDC operators have called for amnesty for those hoarding foreign currencies, citing a lack of available dollars and a need for liquidity. They argue that many people are holding onto dollars, exacerbating the supply shortage, and that an amnesty would encourage them to bring their dollars out of hiding and into circulation.
Experts have attributed the Naira’ s crisis to a combination of factors, including a supply and demand imbalance, a confidence issue, and a lack of effective policy responses. Dr Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, has called for a framework to stabilize the currency, even if it means fixing it at N1, 500. He argues that the current volatility is not good for the economy and that a stable currency is essential for economic growth.
Dr Oluseye Ajuwon, an economist, has suggested that the CBN trace the source of foreign currency to track any illicit inflow, stating that the current interventions are only treating the issue at a surface level and not addressing the root cause. He argues that the CBN needs to get to the bottom of why there is a shortage of dollars and address the underlying issues. The Naira’s depreciation has led to Increased costs of imported goods and raw materials, as well as inflation, causing concern among citizens and businesses. The CBN’s efforts to stabilize the currency have been unsuccessful so far, with the Naira rated the world’ s worst-performing currency over the last month, according to a Bloomberg report.
The situation has also led to a decrease in investor confidence, asforeign investors are hesitant to invest
in a country with a volatile currency. This has further exacerbated the economic crisis, as Nigeria struggles
to attract foreign investment to boost its economy. In conclusion, the Naira’s crisis is a complex issue that requires a multifaceted approach. The CBN needs to address the supply and demand imbalance, confidence issue, and underlying structural issues to stabilize the currency.
An amnesty for those hoarding foreign currencies, as suggested by BDC operators, may also be a viable solution to increase liquidity.
Ultimately, a stable currency is essential for economic growth, and Nigeria needs to take urgent action to address the Naira’s crisis.
