Newsonline reports that a year is a very long time in all but financial markets, especially the forex market where every change in price counts.
This time last year the exchange rate between the naira and dollar was about 503/$1. At the time Nigerians were astonished as no one ever believed the exchange rate will depreciate this bad. The last time the exchange rate had crossed N500 was in early 2017 when it breached that ceiling only to come crashing down after the CBN launched the I&E window.
That’s such a long time now and as we have come to see, it only took a few more months to get to N580/$1 by the end of the year.
Fast forward to today, the exchange rate is N610/$1, with over N100 added within a year. It’s an astonishing development which seems unlikely to abate anytime soon.
The various moves by the CBN to attract forex into the country have not yielded positives in terms of our current exchange rate. Some economists and analysts will however argue that Nigeria’s exchange rate problem is not totally monetary, but cuts through the fiscal side.
For naira to record some stability, the CBN will require a significant amount of FX inflow in order to meet up with pent-up demands, either through Eurobond issuances (which come at a high cost), or improved FDIs, FPIs, and diaspora remittances.
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