The Naira breaks below psychological barrier of N500 to $1.
Does Nigeria need a strong or weak Naira? if Nigeria seeks to stem imports and boost exports which will positively improve GDP, then we need a weaker Naira. However the currency and economic policies must be synchronized, we cannot have multiple exchange rates nor can exports be boosted where industrial capacity utilization is low.
Exchange rates are a strategy to achieve an economic objective. Nigeria cannot desire to “Save the Naira” and seek to boost non agricultural exports, these are divergent goals.
The main issue now is the wide gap between official inter-bank rates and the parallel market rate, a N195 margin simply encourages arbitrage which is accessing foreign currency from official CBN Inter-bank market for the purposes of reselling to the parallel market, The CBN has to close this gap by either increasing foreign currency supply to Inter-bank market to “defend” the Naira or devaluing the Naira.
