In a recent discussion on the state of the Naira in Nigeria’s forex market, financial experts shared their insights on the currency’s ongoing fluctuations. The Naira saw a slight depreciation of 4.24 percent at the official FMDQ market, dropping to N809.02/$1 from N780.03/$1. This trend has sparked concerns among industry stakeholders, leading to a debate on the factors influencing the Naira’s stability.
Kalu Aja, a prominent financial expert, emphasized the critical role of crude oil sales in determining the Naira’s strength. He stated, “Unless we witness substantial crude oil exports, the currency will remain unstable.” This perspective comes as Nigeria reported N5.14 trillion in crude oil sales for the first three months of 2023, up from N4.9 trillion in the previous quarter.
Prof Segun Ajibola, a renowned economist, expressed that the current forex market trend reflects a currency struggling to find its fair value. He emphasized the need for consistent efforts from the Central Bank of Nigeria and the federal government to address supply rigidities in foreign exchange. He highlighted the importance of driving non-oil foreign exchange earnings to sustain an improved supply of dollars and minimize the impact of the unstable global oil market on Nigeria’s forex market.
Professor Godwin Oyedokun, a don at Lead City University, presented seven key action points for the government to address the Naira’s instability:
- Implement sound monetary policies.
- Enhance foreign exchange reserves.
- Promote export diversification.
- Control inflation.
- Strengthen local industries.
- Enhance transparency and accountability.
- Strengthen investor confidence.
Mr. Idakolo Gbolade, CEO of SD & D Capital Management, emphasized the importance of the government’s active intervention in the forex market to stabilize the Naira. He pointed out that fluctuations in crude oil revenue could affect the country’s ability to increase foreign reserves and suggested that the government should intensify its forex supply to clear backlogs and meet new requests.
The ongoing debate highlights the complex challenge of maintaining Naira’s stability in the forex market, with experts offering various strategies and recommendations for a comprehensive solution.