The Naira dropped to yet another record low of N446 on Monday according to prices obtained from our team of black market operators. This is now the weakest the Naira dropped ever.
According to Reuters, traders opined that the reason for the drop was due to “speculators and strong demand from parents buying dollars to pay school fees abroad”.
Ironically, the president of the Bureaux De Change association, Aminu Gwadabe believes the current price is not a true reflection of the Naira.
“The market is being driven by speculators who are taking advantage of the poor implementation of central bank policy requiring banks to sell dollars to bureau de change operators to ease pressure in the market,” Gwadabe told Reuters, adding that most commercial lenders are reluctant to comply with the directive.
The CBN had in July instructed commercial banks to sell earned from foreign remittances dollars to BDC’s in the hope that it would help reduce the scarcity at the retail end of the market. However, that hasn’t worked as most BDC’s continue to complain of their inability to access forex from commercial banks.
Former Central Bank Governor and Emir of Kano, Sanusi Lamido Sanusi had also opined that the naira is currently undervalued suggesting that the current price is perhaps a bubble.
The naira has been on a downward spiral since the CBN announced a ban of 9 banks from the foreign exchange market, a decision it later reversed. The Naira crossed N400 soon afterwards and has continued to depreciate since then.
The Central Bank has also indicated in its monetary policy communique last week, that external reserves were now less than $25 billion highlighting the need for the Government to introduce fiscal policies aimed at ensuring that foreign investments flow into Nigeria.
The naira exchange rate on the official interbank market was flat at 305 to the dollar.
If we say the Naira is currently undervalued, what is the true value? To me the CBN is artificially propping up the value of the naira, and by so doing fueling much speculation. There is a real scarcity of forex inflow to the country through whatever means. Economic activities that will spur demand and growth are in limbo owing to uncertainty over Govt policies. Our reserves has gone below the psychological $25bn mark and Government itself has admitted that it will have sell off some assets to meet cash flow obligations, Yields and rates on bonds and Treasury bills show no sign of abating in the near future
Come on, these are indicators that except a very significant external action that can push oil prices far above $55 can occur within the next 1-2 months, Dangote’s ‘prophecy’ of =N=500/$1 might become a reality
i tell you,what I like most in Nigeria,is the rainbow and the vibration of noise in Nigeria,if the the world end.you find somebody that is a nigerian telling you this is not end of the world.,the issue now we should like Nigeria whether we like or not.
You can locate or migrate to America,one day someday on your way home the police can pull you,if you like ior not,he can fill you with bullet,if anybody you ask him,why he did it,even if you are unarmed.he will say” I thought he was going for his gun”.some will say because you are black,at all as at 1960,america operated a colour bar,like apartheid and this is the end of the story,or somebody high on weed or crack will shoot and you have lost your life,and this is the end of the story,the american constitution guaranteed the bearing of firearm and vigilante.every year every 3 sec in America,there is an attempted murder,which is gun related.since 1968, America have at least 12,000 murder each year.i do not understand why the president of America Mr Obama is shedding crocodile tears,when,there is a serial murder,that is gun related.
The minister of petrol have said.it is cheaper to import refine in Nigeria,than refine them in Nigeria,the minister of finance have said it is cheaper,for Nigeria to borrow abroad to finance,i.e from china ,who am I to say no,after all the media have reported the president have approve this borrowing from china,likewise china will lead this similar sum to argentina i.e 25 cool billion dollar.
There is no central bank in our world that is totally independent,the former governor of the bank of England Mr King was almost fired by the labour lead govt,because his logic is this” there is a moral hazard in bailing the british bank during the crisis”,the woman president of argentna fired the governor of the bank of argentina because they disagreed on monetary policies,all I want the minister of finance to tell us Nigerians “HOW ARE WE GOING TO REPAYS THIS DEBT ? IS IT IN NAIRA OR DOLLAR ?WE WANT TO KNOW ?
the economy have not reached it’s potential in all it resouces,personally I think it’s operating at about 15 % to 20 % of its should be it’s level.nigerians should not forget the governor said in 11 yrs t they cbn funded the cdc to the sum of 60 billion dolla,and there is nothing toshow about it.r,which I like about the governor statement,you cannot blame the cbn for any economic crisis in nigeria