By Chinwendu Obienyi
With acute FX scarcity taking a huge toll on the Naira, economic experts have urged the Federal government and the Central Bank of Nigeria (CBN) to fashion ways of increasing exports and ending round tripping.
According to them, increasing exports and reducing imports will result in an efficient and sufficient FX reserve.
The Naira had depreciated to a record low at the black market after the local currency closed trading on Thursday at N718/$1 compared to N710/$ recorded the previous day. With the exchange rate now at N718/$1, this means that the Naira depreciated by N100 in just 10 days.
However, the exchange rate at the official market recorded significant gain on Thursday, 28th July 2022 as Naira closed at N426.2/$1 from N430/$1 recorded in the previous trading session. Also, forex turnover in the Investors and Exporters (I&E) window increased marginally by 1.93 per cent to stand at $129.13 million.
The CBN raised the benchmark interest rate to 14 per cent in July 2022, following a similar 150 basis points increase in May in order to curb rising inflationary pressure as well as encourage FX inflow into the economy. However, despite the move by the apex bank, the exchange rate is yet to moderate, with more pressure now on the country’s external reserve
Reacting to this development, Bureau De Change (BDC) operators cited a lack of FX and a surge in demand for the recent uncontrolled uptrend recorded in the market. Meanwhile, some bank users have complained that they have not been able to access their funds in their domiciliary accounts due to lack of liquidity. Furthermore, they called on the FG and the apex bank to seek ways of tackling the trend.
Speaking to Daily Sun via a telephone chat, a financial and economic expert, Moses Igbrude, noted that the simple way to tackle the trend is by increasing exports, resuscitating the Export Expansion Grant (EEG) and reducing round-tripping.
His words, “This is very simple. You know the dollar is not our currency but Naira is our currency. The only way we need dollars is when we have school fees to pay abroad or when we import. Now you can only spend the dollar you have in a reserve meaning that the one you got from export. So the logical thing to do is to increase our exports…”