Naira’s rally to N1,500/$ is nothing to celebrate — Teriba

Ayo Teriba, chief executive officer of Lagos-based research firm Economics Associates has said the new found stability of the naira is nothing to be overly excited about given that the local currency fell from as high as N1,300/$ last April.

In an interview on BusinessDay Television Monday, Teriba said the naira at 1,300/$ in April could have been said to be “encouraging” compared to an average of N1,500/$ obtainable today.

“The exchange rate has weakened as far as N1,900 and it’s improved to a best record at the end of April last year when it was at N1,300. Now it’s gone to 1,650 and now going back to 1,500. But compared to 1,300 in April last year, there’s nothing to celebrate,” Teriba stated.

But for many other economists and analysts, the naira’s outlook is bullish as the local currency has been steadily strengthening since the Central Bank of Nigeria (CBN) embarked on some reforms last December to enhance transparency and efficiency of the FX market.

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“Don’t be too quick to express optimism or commend efforts. Inflation is still at record levels. Let’s hope that the exchange rate weakens at a sustainable level to bring inflation down,” Teriba stressed.

For Africa’s most populous nation, the problem is not only about swings in exchange rates but also sky-high prices that’s now fallen to 24.48 percent in January after the country revised its consumer price index.

Teriba said rather than commending the central bank, he would encourage the monetary authorities to do more “until we get to some more meaningful levels.”

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“I don’t think 1,500 is something to celebrate given that we are coming from about less than N500 to the US dollar. What the exchange rate is goes a long way to determine where our dollar GDP value is and our per capita income”.

Government should push for exchange rate to drop to N1,000/$

The economist said while the naira is showing some improvements, efforts must be made so that it’s sustained so the dollar crashes to N1,000.

“The government should be pushing more aggressively to see the exchange rate go back to below N1,000 to a USD and not congratulating ourselves for N1,500 per dollar,” Teriba stated.

CBN’s market intervention shoring up the naira

Together with the reforms deployed by the apex bank to bring calmness to the FX market, it’s equally intervening by selling $25,000 to Bureau de Change operators weekly to sustain the new rally.

“The good news is that the apex bank is intervening in the FX market. 25,000 dollars per week for BDCs is the way to go at this particular time. This is a good intervention to keep the rate the same,” said Paul Alaje, chief economist and partner at Lagos-based business management consultancy firm SPM Professionals.