The Naira strengthened to N1000 per US dollar at the beginning of Monday’s foreign exchange market trading session. Mistila Dayyabu, a Bureau De Change operator, shared this information with the Daily Post.
Dayyabu also mentioned that the Naira is anticipated to continue its appreciation trend and fall below the N1000 per dollar threshold in the upcoming week.
“The Naira is selling between N1000 and 1050 per dollar on Monday. As the week goes on, the Naira will appreciate further to below N1000 per dollar,” he told Daily Post.
The things to Note:
1. The Naira’s surge occurred shortly after it was recognized as the top-performing currency in April by Goldman Sachs.
2. Following the Eid-el-Fitr holidays, the Naira strengthened by N60 against the dollar last Friday.
3. Over the past few months, the Naira has consistently appreciated compared to the dollar, rising from N1,900 in February to N1,000 in the parallel market.
Recall that the Central Bank of Nigeria (CBN) has asked Nigerians to be patient while the bank’s management works tirelessly to strengthen the naira.
The CBN Governor stated this during the Nigerian Economic Society’s (NES) 2024 public lecture, “Recent Developments in the Nigerian Foreign Exchange Market: Issues, Options, and Way Forward,” held yesterday at the CBN Centre of Excellence Hall, University of Ibadan.
Dr. Usman Opanachi, Department of Monetary Policy, CBN, spoke on behalf of the Governor of the Central Bank, Dr. Olayemi Cardoso, At the ceremony, he said:
When the naira is on trial, the CBN is also on trial. We are working tirelessly to address the difficulties, and we are hopeful that things will work out. “The exchange rate is a problem on its own.”
“Excess demand for forex in Nigeria is a legendary problem. It has just been there and over the years, the bank has implemented various strategies to address this problem. Those strategies have only been able to provide some temporary relief.”
“The Central Bank of Nigeria does not supply or produce dollars; It is naira that it produces. CBN management thinks when you hold the price of a commodity that is determined by Fx down artificially, a time comes when you will not be able to do that.”
“The thinking of the new management of CBN is that the policies you have are intended to address the problem. The approach the management has adopted is the Market forces approach. The bank now allows the market forces to play a greater role in the determination of the price of naira.”
Prof Sam Olofin, a famous economist who presented the public lecture, stated that the CBN will find it difficult to manage the foreign exchange market since parallel market forces have taken over.
He went on to say that market forces are extremely powerful and influential, and to make matters worse, the law that established foreign exchange does not enable anybody to hold them to account.
On the development of the Nigerian foreign exchange market, he stated, “We are merely administering the same old medications to a patient with no positive consequences.
The parallel markets go outside the CBN’s purview.”
In his welcoming remarks, Prof. Adeola Adenikinju, President of the Nigerian Economic Society, recommended the FG engage economists on the ailing economy, adding,
“The choice of today’s theme is apt as it is perhaps the most important issue in Nigeria today. From Aso Rock to the CBN headquarters, and NNPC Towers, from Marina Street in Lagos to Bodija Market in Ibadan, the fish seller in Yenagoa to the suya seller in Sokoto to the farmer in Markurdi, the exchange rate is on the lips of everyone. Hence, the choice of the topic for the 2024 NES Public Lecture.
“The subject of foreign exchange is within the ambit of economics. The exchange rate is a price. However, for an import-dependent economy like ours, it is a price that influences other prices in the economy – products, money, and factor markets. The spike in inflation in the last few months in particular has been largely driven by the exchange rate. The pass-through effect from the exchange rate to other prices is quite high”.
“The government, especially the CBN, has reacted to the sharp and persistent devaluation of the naira with a rash of circular policies. At times, we worry that the effects of a particular policy have not been assessed before others are quickly thrown into the mix. This action tends to add to uncertainty and the flight to safety postures of economic agents, who continue to hold dollars outside the banking system.”
The event’s chairman, Prof. Antonia Simbine, Director General of the Nigerian Institute of Social and Economic Research, stated that all Nigerians are interested in finding solutions to the different difficulties.
Prof. Kayode Adebowale, Vice Chancellor of the University of Ibadan, was represented by Prof. Olamakinde Olapegba (DVC Administration) at the ceremony.
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