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Naira stabilises at N750/$ ahead of general elections

The naira at the weekend held relatively stable against the dollar, trading at N750/$ at the parallel market as the 2023 general elections approach.

The local currency closed at N749/$ last week and has been relatively stable after Nigeria regained its position as Africa’s top oil producer after pumping just over 1.2 million barrels per day in December. 

Forex Trader at Aza Finance, Ikenga Kalu, said the increase in production follows efforts by Nigeria to beef up security surveillance for its oil infrastructure to reduce theft. 

At the official market, the naira was exchanging at NN455.56/$ and has remained relatively stable at the market. 

Managing Director, Cowry Asset Management Limited, Johnson Chukwu, said that to save the naira, Nigeria needs to build an economy that is net exporter of valuable goods and services to earn more dollars.

He said priority should be given to manufacturing and exports to enhance speedy recovery of the local currency.

Global Chief Economist at Renaissance Capital (RenCap), Charles Robertson, said Nigeria is in a difficult position and needs to increase its dollar earnings and other revenue to support the naira.

He said Nigeria should hike taxes, raise more revenue as the country’s current position is so bad, that it has never been witnessed in the last three decades.

Robertson, who is also RenCap’s Head Macro-strategy Unit, added: “Things are not looking pretty good for Nigeria and other emerging markets. Oil production in Nigeria has fallen so badly in the last few years and oil prices is also about falling more. We are going to see disinflationary policies coming because we are approaching recession,” he said.

Managing Director, Financial Derivatives Company Limited, Bismarck Rewane, said the naira is falling on the back of heightened forex demand compared to limited forex supply.

He said: “Nigerian consumers, businesses and individuals alike are facing challenges and headwinds and are reeling in an atmosphere of hopelessness. This is because of a myriad of factors.”

“Notably, the precipitous fall of the naira in the forex market, the power supply shortage (national grid – 3,500MW) and now the almost unaffordable price of diesel (N850/liter). In spite of the hike in interest rates, we are witnessing what some analysts fear may become a bout of runaway inflation.  Inflation is not just domestic but global.”

As part of its longer term forex strategy to save the naira, the CBN announced a rebate scheme to raise $200 billion in earnings from non-oil proceeds over the next three-to-five years by incentivising exporters to repatriate and then sell dollars into the local market.

This, move and several others were targeted at making the local currency stronger against the greenback and other global currencies.

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