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Saturday, May 4
When asked to speak on the recent Naira appreciation and if it is safe to conclude that the era of Dollar draught has come to an end, Nigerian financial analyst,Gbenga Onifade,responded:“Nigeria’s currency, the naira, gained 40% in the last month against the dollar, making it the world’s best currency performer.
With the recent surge in global oil prices due to geopolitical tensions, Nigeria’s export earnings have risen, strengthening the Naira’s value.
Inflation Control –The government should prioritize policies to lower inflation rates and enhance Nigerians’ living standards.Security Measures–Establishing a secure environment is essential for attracting investments and fostering economic growth.
He said:“Nigeria’s currency made a 40% gain in one month.
This can draw in investors and boost initial confidence in the nation’s currency, but on the other hand, it has yet to defeat inflation.
“Naturally, high inflation results in a weak currency, thereby restraining investment and adversely impacting the exchange rate.
“Recent commendable gains might make us feel like one for the record books, it should still be noteworthy that oil production has been on a decline with a lot more unsold inventory.
On the other hand, low inflation creates a strong currency, leading to stronger currency and liquidity and enhancing the exchange rate.
“We have not seen the last.” “The majority of the Nigerian population can not wait.
The financial analyst believes that the latest Naira gain can attract investors and boost initial confidence in the nation’s current situation.
However, despite the positive progress in the Naira’s value, it is crucial to exercise caution when proclaiming a complete economic recovery.
Importers, who heavily rely on the Naira’s strength to purchase foreign goods, are facing higher costs, which are often transferred to consumers.
“A further strengthening of the Naira is favourable to Nigeria’s balance of trade.
A month is a long time; Nigerians cannot sustain 24 months if CBN’s strict policies do not translate to some fat in their already-thinned pockets,”Onifade noted.
The financial analyst:“This behaviour seems opaque, as while laudable, part of what helped the CBN achieve the current feat was the eradication of speculative activity, which is against a free and fair market.
Before conclusion, let us examine some factors contributing to the Naira’s rise, which include oil price, CBN intervention and diaspora remittance, among others.
Therefore, this would not result in a drive for the exportation of goods and services.” Speaking further, Onifade noted that in a recent interview in Washington, the CBN governor,Yemi Cardoso, quipped while defending the Naira and talking against market intervention as not in line with CBN philosophy and policy.
This is a real test of endurance, creating division and a real headache among experts – the clock is ticking, but we don’t have the time.” Food Prices:The prices of essential food items such as rice, garri, and beans have increased in recent weeks.
Presently, Nigeria’s inflation is at over 33%, chartering at a precarious level, then cushioned with a rate hike of 600 basis points in March as a course of action by the CBN.
“President Tinubu initiated new measures to tackle inefficiencies in the system, the CBN governor has equally introduced lots of new controversial policies..
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