Nigeria’s currency, the Naira, has hit an all-time low, depreciating to N1,710/$ in the parallel market and N1,660/$ in the official market. This drastic decline has sparked concerns among financial analysts, who predict further distortions that could erode the Naira’s value.
Causes of Naira’s Woes
Experts attribute the Naira’s struggles to Nigeria’s economic challenges, including:
1. Huge fiscal deficit
2. Excessive public borrowing
3. Dwindling foreign exchange income
Solutions to Strengthen Naira
Analysts recommend:
1. Austerity measures to reduce recurrent expenditures and balance the budget
2. Increasing crude oil production to 1.8-2mbpd
3. Diversifying exports to non-oil products and services
4. Fiscal policy reform to increase foreign currency sources and restructure the economy
Mixed Reactions
While some experts advocate for a managed float, others see benefits in the Naira’s depreciation:
1. Cheaper Nigerian products in international markets
2. Increased competitiveness
3. Higher foreign exchange earnings for exporters
However, businesses face:
1. Increased operational costs
2. Eroded working capital
3. Complicated import dependencies
NACCIMA’s Concerns
The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) highlights the ongoing economic challenges, emphasizing the need for:
1. Proactive and transparent Central Bank policies
2. Confidence restoration
3. Fair economic environment
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