Low confidence in naira is forcing Nigerians to hedge money in dollar – Economist

AN Economist, Tope Fasua on Friday said many Nigerians are hedging their money in the United States dollar due to low confidence in the naira.

He also noted that speculators are having huge impact on Nigeria’s foreign exchange market because of the wide gap between the official rate of the dollar – Import and Export Window (I & E window) and the parallel market.

The naira, in recent weeks, has been experiencing a downward spiral following activities of the speculators.

However, it started appreciating during the week as records showed that on 5th August, the I & E and the parallel makets closed at N428. 23/$1.00 and N660. 00/$1.00.

Fasua, who spoke on Channels Television, noted that “a situation whereby the citizens are taking position against their currency and storing their monies in dollar is not good for our local currency.

“The Central Bank is found struggling to meet the official transactions and market demand. The CBN and the Customs are doing some reforms in terms of checking and verifying invoices abroad, but such reforms should be tech-enabled to make it seamless.”

He also said that the Bureau de Change Operators (BDCs) are set up globally to grow tourism and not to conflict their functions with the parallel market.

“BDCs should be saying they are selling money at the black market rate basis. They are established to assist tourists to quickly change their money or buy quick money and move.”

He stressed that Nigeria must buckle up and be like the rest of the world in terms of electronic banking, noting that it would lessen hoarding of the dollar.

“We are a cash intensive country despite reforms on electronic banking. Outside the country, cash is becoming outlawed. We must fall in line with what is happening globally.”

According to the economist, the Central Bank of Nigeria would also need political backing for any kind of reform it sets out to do on the local currency.

“People are basically taking a position at speculating the naira. What that means is that it promotes arbitrage in the market. Now anybody owns a domiciliary account.

“If Nigerians are saving their money in the dollar, and taking position against their currency. We see a lot of money around the hand of politicians in dollars,” he said.

Fasua added that taking a firm stand on the naira is a political issue. According to him, the President needs to get involved, and speak confidence into the local currency.

    “The management of the currency of a country is not just the function of the Central Bank, the President needs to speak. The President has to understand that the currency is part of its function.

    “If your people are expressing low confidence in your currency, the President needs to let people know the meaning of their currency.”

    He stressed that the currency is the representation of Nigeria and its worth and should not be treated in disdain.

    “We have come to the point where we need to de-dollarise the system and having a personal domiciliary account also means taking a position against your own local currency,” he said.

    Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.

    Join the ICIR WhatsApp channel for in-depth reports on the economy, politics and governance, and investigative reports.

    Support the ICIR

    We invite you to support us to continue the work we do.

    Your support will strengthen journalism in Nigeria and help sustain our democracy.

    If you or someone you know has a lead, tip or personal experience about this report, our WhatsApp line is open and confidential for a conversation


    Please enter your comment!
    Please enter your name here

    Support the ICIR

    We need your support to produce excellent journalism at all times.

    - Advertisement