Experts praise FG as Naira strengthens, hits ₦1,405/USD exchange rate

Some financial experts have commended the Federal Government for some of its monetary policies that have led to the steady appreciation of the Naira against the dollar. NAN reports on Thursday in Abuja that the Naira exchanged for as high as ₦1,900 to the dollar in February. However the currency has gradually appreciated after the last Monetary Policy Committee (MPC) meeting of the Central Bank of Nigeria (CBN). It exchanged at ₦1,405 to the dollar at the official Nigerian Autonomous Foreign Exchange Market (NAFEM) window and ₦1,450 to the dollar at the parallel market on Monday. According to a past president of the Chattered Institute of Bankers of Nigeria (CIBN), Okechukwu Unegbu, the aggressive monetary policy tightening adopted by the CBN appears to be paying off. Unegbu urged the apex bank to continue its monetary policy tightening while improving in the forex liquidity. “A lot of people criticised the aggressive monetary policy tightening on the CBN, but it seems to be paying off.

“It is not yet time to celebrate, though I urge the CBN to do more to improve dollar liquidity and further push down the dollar exchange rate,’’ he said. He said that the action against Binance, a global company that operates the largest cryptocurrency exchange, had also yielded positive results. Dr Wunmi Bewaji, a securities and financial regulation expert, said that the current momentum of Nigeria’s Naira against the dollar was sustainable. According to Bewaji, the dollar is likely to decline rapidly at a point in time in the next few weeks. He traced the recent noticeable success of the Naira to some drastic steps taken by the Federal Government, most noticeably on Binance. Bismark Rewane, the Chief Executive Officer of Financial Derivatives, a Business Management Consultancy firm, said that the exchange rate was sustainable as long as the right things were done. “Interest rates have been increased, therefore, the propensity to save has increased, and the propensity to consume has reduced. People are consuming less and saving more. The government itself is consuming less and saving more,” he stated.

He said that there was a need for new money. “New money is a function of confidence. Confidence is a function of consistency in policy. These are the things that the government has to come to terms with,’’ he added. According to Prof. Uche Uwaleke, the Director, the Institute of Capital Market Studies at the Nassarawa State University, Keffi, inflationary pressure has persisted despite moderation in the exchange rate. Uwaleke complained that headline inflation had remained stubbornly elevated, climbing above 30%, way ahead of the CBN’s target of 21.4% for 2024. He urged the apex bank to stop further tightening of the rates. Dr Chijioke Ekechukwu, an economist, said that the improvement in the exchange rate came from an increase in foreign currency supply.n“We need to isolate the impact of the recent tightening, in order to determine the impact of the other factors on the exchange rate and inflation rate,’’ he noted. Meanwhile, the CBN said that it had successfully resolved all valid foreign exchange backlogs by addressing inherited claims amounting to seven billion dollars. According to the apex bank, a last verified payment of 1.5 billion dollars was made last week to settle obligations to bank customers, thereby, clearing the remaining balance of the FX backlog.

Also, the government has warned currency speculators to desist from unpatriotic acts against the national currency, saying racketeers would have their fingers burnt. The Special Adviser on Information and Strategy to the president, Bayo Onanuga, cautioned currency traders speculating on foreign exchange to sell their dollar holdings, adding that the Naira was expected to increase in value soon. He advised speculators to sell off their dollars to prevent potential losses. “With backlog FX settled, Naira is set to appreciate further, faster. Currency speculators should quickly dump their stock of dollars to avoid sorrows and tears’’.