• Tuesday, July 23, 2024
businessday logo

BusinessDay

Naira to strengthen to N700/$ as Tinubu eyes foreign equity investments — Edun

Nigeria’s Naira Woes Point to a Bigger Problem in Africa

The Nigerian naira should exchange at N700 per US dollar once the Central Bank of Nigeria has fully reversed all the damaging policies of the previous administration and efforts towards raising equity from foreign investors lead to more dollar inflows, Wale Edun, who is nailed on to be the country’s next finance minister, said during his Senate screening Tuesday.

“The issue of foreign exchange is clearly uppermost in the minds of the monetary authorities,” Edun said.

“For a country with revenue flows from oil revenues, from remittances, from other non-oil exports, and from financing of over $100 billion a year, there is no reason that there should not be a stable exchange rate,” Edun said.

“All other things being equal and provided inflation is kept under control, the N860/$ that we are seeing is not backed up by the fundamentals of the Nigerian economy,” he said.

Edun who said “The fundamental value of the naira should be somewhere around 700,” also sounded a note of caution to currency speculators.

“As liquidity flows in and the rate comes rapidly down, there is a chance that they (speculators) could lose their shares, it is just a warning,” Edun said.

The naira, which has lost over 60 percent of its value against the dollar since the currency was floated in a marked departure from the previous practice where the CBN tightly controlled the exchange rate, has come under pressure since the much-awaited foreign exchange reform in June.

The naira closed at N757/$ Tuesday according to FMDQ data, lower than the previous day’s closing rate. The currency traded even weaker at N871/$ in the parallel market. Banks are now asking clients on a long queue of dollars to bid at N900/$ to stand a chance of getting the scarce greenback as the CBN struggles to meet a huge pile of demand.

“The rate, when you move aside speculation and the fact that there is as a result of foreign exchange managing practice of the past, the inefficiencies and the corruption involved has meant that there is an overhang of unpaid dollar bills and that is what is putting pressure on the exchange rate and that is what night and day the monetary authorities and the monetary team of Mr. president is looking to resolve by raising revenue, by looking at other sources of investment funding, by attracting investment funds, equity funds not debt, from around the world interested in investing in the Nigerian economy,” Edun said.

Details later…