The Nigerian naira has seen a significant depreciation of about 214.64% against the dollar since the harmonization of the foreign currency market segments a year ago. The Central Bank of Nigeria (CBN) abolished the segmentation of the FX market, allowing all transactions to be done through the Investors and Exporters window. This move aimed to determine the exchange rate through market forces and reintroduce the ‘willing buyer, willing seller’ model at the I&E window.
Despite efforts by the CBN to stabilize the currency, the naira closed at 911/$ at the end of 2023, marking a considerable drop in six months. The currency faced volatility, reaching almost 2,000/$ and shifting from the best-performing to the worst-performing currency globally within months.
Economists like Ayo Teriba praised the CBN for its handling of the FX market harmonization fallout, while Marcel Okeke viewed the naira’s floatation as a calamity. Despite concerns, experts like Ayodele Akinwunmi noted achievements like market convergence and improved foreign investor confidence, emphasizing the need to boost forex supply in non-oil sectors to grow the economy.
The Economist Intelligence Unit’s projection of a stronger dollar could add to the naira’s challenges in the coming years, emphasizing the importance of strategic measures to stabilize the local currency.
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