How To Save Naira From Further Devaluation- Experts

With Nigeria’s currency exchanging for about N500 a dollar, financial experts have said that the country needs to industrialise and build up dollar reserves to check the naira from further depreciation.

The Central Bank of Nigeria in order to adjust for the decrease in supply of foreign exchange, devalued the naira from N305 a dollar to N360 per dollar and subsequently to N380 per dollar.

The currency on Monday slumped to N500 for a dollar at the parallel market, the worst since the 2016 recession.

Renaissance Capital’s Global Chief Economist, Charles Robertson, told THE WHISTLER in an interview that the value of the currency may slide further if urgent action is not taken to boost industrialisation.

He added, “In the short term i.e 1-2 years, the value of the naira may be heading for the worst.”

Robertson blamed the CBN exchange rate policy and the low oil price, as a major reason for the plunge in the naira.

He said, “In the long term Nigeria needs to industrialise, build up savings and then inflation and the currency will be better.”

The Lagos Chamber of Commerce and Industry Director- General, Muda Yusuf in a mailed response said there is need to restore normalcy to the foreign exchange market by broadening the scope of market expression in the allocation mechanism.

The Lagos based LCCI boss said the country needs to show greater commitment to the fixing of the structural issues that have limited the inflow of foreign exchange.

kalu Aja, a financial analyst also said the country needs to build- up supply for dollar in order to end the naira devaluation streak.

Kalu said, “Supply is king. Even if $1 becomes N200, 000, if supply exceeds demand, the value will fall.”

“The problem is not that Nigerians are seeking dollars to import, the problem is Nigerians are seeking dollars as a store of value. If inflation is 14 per cent and risk free rate are three per cent and equity markets are sideways, what should an honest holder of Naira do?”

The Central Bank Governor, Godwin Emefiele had during the last Monetary Policy Committee meeting vowed to maintain its policies on exchange rate and financial system stability, in a bid to attract more investment into the country’s equities market.

Emefiele also hit the unofficial market saying, “We do not agree that the determining factor for our currency should be based on a market that is tainted, where people go to offer bribes.

“The black market is illegal where people do not provide documentation to support transactions. It is unfortunate and unfair for analysts to say Nigeria’s exchange rate is at 480 per dollar.”