The delusional fall of the naira to the dollar
The rate of the naira against the dollar has become a topical issue in Nigerian polity. This rise has affected every sphere of business, and some are using hope as an economic tool to balance the fall of the naira against the dollar. The highest rate since this administration is 1611 NGN on March 15, 2024; the average rate is 1002 NGN; and the lowest is 758.7 NGN on October 7, 2023.
Professor Kingsley Moghalu, former Deputy Governor of the Central Bank of Nigeria and the former presidential candidate of the African Democratic Party, ADC, and a political economist, has in his tweet described Nigerians who want the unreal fall of the naira for the dollar as delusional.
“Those who want the naira to be N400 to the dollar are living in a dream world. Even discounting for the negative impact of speculative attacks on the value of the naira, the exchange rate will (and should) reflect its market value in reality, not the artificiality that the Emefiele-era central bank sought to maintain to please economic illiterates in political power at the time. That artificiality created room for massive arbitrage by speculators, which bled the economy. Nigeria does not yet have a productive export economy. That’s the heart of the matter.
“And we do not have $100 billion in foreign reserves. So on what basis would the Naira forex rate return to some fantasy land soon? It will also take time to regain or achieve full investor confidence, such as we had when we were there (and the rate was N150-165 to the dollar).
“The sooner we focus on the painstaking creation of a value-added manufacturing export economy that earns forex beyond oil in real and significant terms, the better. Key to this is the electricity conundrum, in which we have been at less than 4,000 megawatts of generation for a population of 200 million for decades now. Take power to even 20K megawatts (let’s not talk of 50K for South Africa’s 60 million population or Brazil’s 181K megawatts for a population only slightly larger than Nigeria) and you will see what the Nigerian entrepreneurial spirit is capable of.”
He inferred that Nigeria needs a solid export economy, as this will greatly stabilise the value of the naira in the international market.
By Chidimma NWAFOR
