NAIRA'S VALUE VS THE DOLLAR HAS DROPPED BY 69% AFTER THE FX CHANGES.

Under the President Bola Ahmed Tinubu administration, the naira has lost 69.47 percent of its value relative to the US dollar as FX reforms have been implemented.

Based on information gathered from the FMDQ Securities Exchange, the value of the naira as of June 8, 2023, prior to the unification of the FX markets, is N1,537.96/$1.

The naira hit an all-time low of N1,537.96 per dollar at the official market on Friday, adding to the pressure on the FX market. Despite the Central Bank of Nigeria's (CBN) market interventions, the naira is expected to continue weakening this week.

Due to strong demand, the naira dropped to a record low of N1,650 per dollar at the parallel market, popularly known as the black market, after the close of business on Friday.

The managing director of Afrinvest Research and Consulting, Abiodun Keripe, stated that the naira continue to weakening due to the lack of dollar liquidity.

The country's currency has lost 89.73 percent of its value on the official market during the past ten years, and it has kept losing dollars. As a result, businesses are under pressure, inflation is on the rise, and purchasing power is being eroded.

According to data from the central bank, on February 14, 2024, the value of one dollar was quoted at N1,517.20 (the CBN rate), which was less than N155.75 on the same day in 2014.

The nation's external reserves, which provide the CBN with the means to defend the naira, have also decreased by 6.35 percent resulting to low FX revenues brought things, by high demand for FX and fluctuating oil prices.

Nigeria's FX reserves decreased from $35.42 billion on February 13, 2014, to $33.17 billion on February 13, 2024, according to data from the CBN.

Additionally, according to data from the CBN website, the price of crude oil has decreased by 21.16 percent over the past ten years, from $110.32 per barrel on February 13, 2014, to $86.98 per barrel as of February 13, 2024.

Nigeria's FX profits are mostly derived from oil exports.

As the naira is currently at its lowest point in over 15 years, now is a good moment for consumers to invest in real assets by selling their dollars for naira instead of the other way around. The strategies adopted up until mid-2023 were bound to result in the currency weakness we've seen over the past year, according to an email answer from Charlie Robertson, head of macro strategy at FIM Partners UK Ltd.

There are several reasons behind the naira's ongoing depreciation versus the US currency. Dependency on imports: Mercy Okon, a research analyst with Parthian Securities, stated, “On imported goods puts immense pressure on our FX reserves, contributing to currency instability.”

Nigeria's export market is still small, making us susceptible to changes in the price of commodities globally. To stabilize the naira, export diversification and the revitalization of home manufacturing sectors.

She claims that in order to strengthen the naira, import dependency must be addressed in addition to increasing exports through focused investments and reforms.

Muda Yusuf, the CEO of the Center for the Promotion of Private Enterprise, attributed the continuous devaluation of the local currency to macroeconomic management, which itself in the economy when it is continuously below average.

He stated that the gradual expansion that is out is GDP and the long-term budget deficit are both important contributing factors.

According to the CBN, M2 increased by 48.25 percent annually in December 2023, from N52.83 trillion to N78.32 trillion.

The total amount of money in an economy that is in circulation. Tangible money includes coins deposits that are easily convertible to cash. We still have hope for the naira; the problem will only take time to resolve. I've covered a number of structural and attitudinal elements in this post. There isn't a simple solution for those issues. Gaining economic competitiveness takes time. Although views can be changed, it takes time, especially for those in the political and administrative classes, he added.

In its 2024 outlook report, the Nigerian Economic Summit Group stated that the country's external reserve growth will be accelerated and the trade surplus will be sustained due to an expected increase in output and oil prices globally.

According to the research, by the end of 2024, the CBN's limited involvement in the FX market is expected to have contributed to an increase in foreign reserves to about $40.0 billion.

As a result, a rising trend is predicted for it to reach N900/$. In a similar vein, it is expected that a decrease in shortages of foreign currency will stabilize activity on the black market, whereupon exhibit some stability and depreciate more slowly than it did in 2023, other changes to FX policy, the CBN ceased paying Basic Travel Allowance (BTA) and Personal Travel Allowance (PTA) in cash two weeks ago.

This is an effort to curb unethical behavior and promote stability and openness in the FX market. Referencing memo 8 of the FX manual and circular FMD/DIR/CIR/GEN/08/003 dated February 20, 2017, the CBN's trade outlined to PTA/BTA.

All banks that are authorized dealers must handle PTA/BTA electronic methods, such debit card.

The circular made it clear that it is no longer allowed to give these allowances out in cash.

The directive, which was signed by Hassan Mahmud, the head of the trade, reiterated the CBN's commitment to transparency in the FX market.