To stop the naira’s steady decline against the dollar, the Federal Government has been advised as a matter of urgency to stop the acrimonious theft of crude oil, increase oil production and take necessary measures to boost local production and the export of other goods.
Some economists told our correspondent in an interview on Saturday that these were needed to boost the country’s foreign exchange earnings and close the supply gap.
However, the Association of Chambers of Commerce, Industry, Mines and Agriculture warned that if nothing is done urgently, the naira could fall to around N700 per dollar.
Manufacturers, business owners and many Nigerians have expressed deep concerns about the value of the naira, which was exchanged for N590 on the parallel market a few days ago. While the official rate stood at N416.23, findings from different sources on Saturday night showed that the naira had fallen to an all-time high of N600 per dollar.
Coupled with the 15.7 percent inflation rate, the persistent currency crisis has caused property prices in the country to rise sharply.
Cowry Asset Management MD/CEO Mr. Johnson Chukwu said the naira had continued to suffer a free fall due to weak forex gains, due in part to low crude output, crude theft and low export of goods.
He said: “It’s about how much you spend on import compared to how much you earn from export. We are not producing enough so we do not have enough resources to support the naira.
“The immediate solution is to stop the theft of crude oil so we can get more revenue, and the long-term solution would be to diversify our economy so we can produce more exportable products or produce more than we consume to limit our import.”
He said that the interventions of the Central Bank of Nigeria, such as the closure of Abokifx and the ban on the sale of foreign exchange to Bureau De Change, could not reduce the price because the current price was a product of supply and demand.
In addition, the president of the National Association of Chambers of Commerce, Industry, Mines and Agriculture, Ide Udeagbala, said that critical infrastructure such as energy must be repaired to boost the local production of goods, both for local consumption and for export.
He said: “The exchange rate could get to between N600 and N700 per dollar the way it is going, as long as we don’t export and import almost everything. However, how do we talk about production when there is no electricity? The national grid crashed twice two weeks ago and people had to buy diesel at N700.
“So the solution is that we have to produce enough to export to earn foreign exchange. Crude theft is also a problem. If we are expected to produce two million barrels per day and today we are at 1.3 million bpd, is it difficult to know why we are here?
In addition, the Executive Director of the Center for the Promotion of Private Enterprise, Dr. Muda Yusuf, said that in addition to tackling crude oil theft and increasing production, the government should consider a flexible exchange rate policy regime, other than devaluation.
He stated: “This model would improve liquidity in the foreign exchange market, reduce uncertainty in the foreign exchange market and improve investor confidence. Furthermore, it is a more transparent mechanism for currency allocation, minimizes discretion in currency allocation, and reduces opportunities for back-and-forth and other sharp practices.”
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