Federal Government Identifies Solution to Naira Free Fall Against US Dollar
- The Bola Tinubu government seems to have a solution for the naira's struggles in the foreign exchange market
- Forex supply has been a major issue, and the federal government of Nigeria believes increasing it will bring stability
- Naira has been on a free fall since 2023 and recently recorded its worst performance in the official and unofficial foreign exchange markets
Legit.ng journalist Dave Ibemere has over a decade of experience covering tech, energy, stocks, investments, and the economy.
Wale Edun, Nigeria’s minister of finance and coordinating minister of the economy, has identified boosting oil production as critical to stabilising the naira-to-dollar exchange rate.
Speaking at the ongoing International Monetary Fund (IMF) annual meeting, Edun stressed the need to address foreign exchange (FX) supply issues by improving the country's oil output.
Source: Getty Images
He noted that Nigeria needs to boost its foreign reserves to help the naira against other foreign currencies, TheCable reports.
According to FMDQ Securities Exchange securities, the naira fell to N1,653.02/$1 exchange rate in the NAFEM window on Tuesday, October 21, 2024.
Edun words:
“As an oil-producing country, we just need to get our oil production up, and that will deal with the issue of foreign exchange supply and pressure on the naira."
The minister added that Nigeria’s economy heavily depends on its oil and gas sector, which provides a significant portion of its FX receipts and strengthens external reserves.
Minister defends CBN policies
Edun also defended the Central Bank of Nigeria's (CBN) decision to maintain a monetary tightening stance.
He explained that, while advanced economies have managed to bring inflation under control and lower interest rates, Nigeria is still struggling with high inflation.
As a result, he said the CBN has maintained a monetary tightening stance.
In addition to economic reforms aimed at stastabilisinge FX market, Edun highlighted the importance of poverty alleviation programs to shield vulnerable Nigerians from the immediate costs of these reforms.
He said:
“The key is to implement social safety nets that help the poor cope with rising costs."
He further stressed that transparent communication about the timing and progress of reforms is crucial in building public trust.
The minister added:
“There needs to be a dashboard that people can follow, tracking what has been done and the expected benefits."
CBN hopes for new naira-to-dollar exchange rate
Earlier, Legit.ng reported that the CBN revealed that Nigeria's foreign reserves had increased.
This came after the successful 500 million dollar bond issuance, which signifies investor confidence.
The increase would be a welcome development for the Central Bank of Nigeria in its fight to help the naira recover in the foreign exchange market.
Proofreading by James, Ojo Adakole, journalist and copy editor at Legit.ng.
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Source: Legit.ng
