'Can’t CBN do this?' - Experts proffer solutions as naira falls to lowest level against US dollar

The current naira crisis, which has seen the Nigerian currency fall to a record low at the official market, can be stopped.

Financial analysts suggest that for this to happen, the federal government and the Central Bank of Nigeria (CBN) must be ready to open the market.

They believe the government has no business controlling the foreign exchange market and should be privately driven.

Naira to dollar value

Legit.ng earlier reported that the naira fell at the Nigerian Autonomous Foreign Exchange Market to N996.75 a dollar on Thursday, November 9, 2023.

At the black market, naira to dollar exchanges at N1,120/$, while in the P2P window, traders quote an exchange rate of N1,079.2/$.

Experts proffer solutions

Speaking on the current state of the Naira, Kalu Aja called on the Central Bank of Nigeria to include Bureau de Change operators officials in the foreign exchange market.

His words: "Why can't CBN do this? Well, CBN does not have $1 billion to burn a week; in other words, CBN has no supply.

"So, if CBN has no supply, what does it do? It devalues. So, only two choices: 1. Defend by selling $1 billion to BDCs, and 2. Devalue & preserve Fx reserves.

"Very easy. CBN sells $1 billion to Binance and BDCs every week. So, $4 billion a month, or $48 billion a year. I Guarantee you Naira will become very strong."

For Amamchukwu Okafor, Senior Consultant, Native Insight, the naira's only source of recovery is for the federal government to earn more foreign exchange through resource exports.

He noted that the free fall of the naira is because the CBN devalued without improving the National productive capacity and export base.

Okafor added: "Naira will fall because the fundamentals that should anchor it are missing. Artificial demand for FX (i.e. speculation) creates depreciation pressure against the Naira.

"Therefore, in the short run the government can reduce, drastically, the artificial demand for FX by reducing informality in imports and FX trading.

"In Nigeria today, there’s no condition or limits to who can import in commercial quantities, anybody can import without control."