The Naira experienced a free fall after President Bola Tinubu unified the dual exchange rates and floated the currency in 2023.
The policy, coupled with the prevailing dollar illiquidity had seen the Naira exchanging for as high as N1,900 to the dollar in February.
However, the currency started gradual appreciation in March, peaking at N1, 100 to the dollar at the parallel market in early April.
This was as a result of the monetary policy tightening by the Central Bank of Nigeria (CBN), and attempt to improve dollar liquidity by selling some treasury bills to foreign portfolio investors,
The Naira, again, started losing steam and becoming weak towards the end of April, and now exchanges at N1,400 to the dollar.
According to Okechukwu Unegbu, a past president of Chattered Institute of Bankers of Nigeria (CIBN), the steps taken by the apex bank to strengthen the Naira so far are not organic and thus is not sustainable.
He called for improved productivity, consumption of locally manufactured goods and services, and a gross reduction in exportation.
“The only way to strengthen the Naira is by ensuring that we consume what we can produce.
“In the past, when the Naira has value, it is because of the preponderance of industries across the length and breadth of Nigeria. That is no longer the case.
“I have also been advising that we price our crude oil in Naira, but no one appears to be listening.
“If we price our crude oil in Naira and buyers start to source for Naira to Nigeria’s crude, you can only imagine what that will do to the exchange rate, ” he said.
A renowned economist, Prof. Ken Ife, said that the import dependence nature of Nigeria’s economy was a major fuel to weakening the Naira in the foreign exchange market.
According to him, not much has changed in terms of the structure of the economy over the years.
He said that Nigeria was part of an international division of labour, which confines it to the provision of raw materials and consumer of finished products.
“Any attempt to add value to our exports is usually met with stiff resistance.
“When a country is import dependent, it becomes so vulnerable to any external, global headwind, and it affects the economy,” he said.
Dr Chijioke Ekechukwu, an economist, said that the recent improvement in exchange rate came from an increase in foreign currency supply.
Ekechukwu said that the exchange rate must be stable to enable planning and to restore confidence in the economy.
According to him, every possible avenue should be explored to diversify the country’s export base.
He advised the Federal Government to ensure that the country’s crude oil sales met the OPEC quota of 1.8 million barrels per day.
“The Federal Government should also ensure that revenue from crude oil sales came in on a daily basis through the CBN.
“Such a step will provide the country with enough liquidity to check inflation and other economic challenges.
“We need to isolate the impact of recent monetary policy tightening in order to determine the impact of the other factors on the exchange and inflation rates,’’ he said.
The Association of Bureau De Change operators of Nigeria (ABCON), said that the BDC operators were committed to wadding off attack on the Naira by speculators.
According to its President, Aminu Gwadabe, ABCON, as a self-regulatory body, has platforms to check excesses of BDC operators.
“We have inaugurated state chapters whereby we can have data repository of participants in the forex market.
“This is for the Financial Action Task Force (FATF) to understand this market and to know the participants, give them a simple registration,’’ he said.
He said that what the foreign exchange market needed was a kind of harmonisation; a centralisation and KYC to know all participants in the business.
“This will enable the CBN to track other players in the market other than the BDCs and their levels of involvement.
“The BDCS are collaborating with the regulatory authorities for physical verification of offices using technology.
“We want to balance international obligations with our own objectives. International obligations are templates that have been built without our imput.
“We are coming with our own template to balance it. We have seen some illegal economic behaviour, and the CBN and the security agencies are aware, and I am sure they will nip it in the bud,’’ he said.
He said that the recent wave of depreciation of the Naira was of concern to the BDCs operators.
“As long as Binance and such other platforms continue to be profitable, the Naira will continue to depreciate.
“There are many of them in the system. Binance has been nipped in the bud, but there are still many. They are online platforms with no registration, no restrictions,’’ he said.
He said that people had turned dollar to be an asset and to be a commodity of trade.
“That is why those platforms continue to thrive.
“We have seen where people are buying dollars into their domiciliary accounts to finance these schemes,” he said.
Meanwhile, the CBN said that it had successfully resolved all valid foreign exchange backlogs by addressing inherited claims amounting to seven billion dollars.
The apex bank said a last verified payment of 1.5 billion dollars was made in April to settle obligations to bank customers, thereby, clearing the remaining balance of the FX backlog.
The bank said it also recently approved the sale of an additional 10,000 dollars each to 1,583 eligible Bureaux De Change (BDCs) in the country to meet market demands.
The Director, Trade and Exchange Department of the CBN, Dr Hassan Mahmud, said that the CBN would sell to the BDCs at the rate of N1, 021 to a dollar.
“The BDCs are in turn to sell to eligible end users at a spread of not more than 1.5 per cent above the purchase price,” he said.
He directed all eligible BDCs to commence payment of Naira deposits to some designated CBN Naira deposit account numbers.
“All BDCs are advised to continue to abide by the rules and conditions as stipulated in our earlier operational guidelines,” he said.
The CBN had earlier on April 8, approved the sale of 10,000 dollars to 1,588 eligible BDCs operators at the rate of N1,101 to the dollar.
The approvals are part of CBN’s intervention in the foreign exchange market to improve liquidity and stabilise the Naira.
