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Naira Tumbles to Unprecedented Low, According to Central Bank of Nigeria, the Currency Is Underpriced

The naira, Nigeria’s currency, has sustained a decline against the U.S. dollar, recently dropping to an unprecedented low of NGN950 per USD. The Central Bank of Nigeria’s interim governor, Folashodun Shonubi, firmly asserts that the naira’s current rate is undervalued. The International Monetary Fund (IMF) attributes Nigeria’s lenient fiscal and monetary strategies as the root cause for the naira’s difficulties.

Nigeria Might Discontinue Recent Exchange Rate Approach

The sharp devaluation of Nigeria’s currency reached a milestone, exceeding 900 per dollar for the first time as it hit an all-time low of NGN950:USD1 on Aug 9. This most recent dip occurred shortly after the Economic Intelligence Unit cautioned that the Nigerian government might contemplate dropping the floating exchange rate policy implemented in mid-June.

The Cable’s report reveals that the persistent scarcity of the U.S. dollar in both official and unofficial markets has spurred the naira’s latest decline against primary currencies. Concurrently, this fall has led some Nigerian economic experts to predict an additional weakening of the naira in the coming weeks.

Nonetheless, Folashodun Shonubi, the acting governor of Nigeria’s Central Bank, is adamant that the naira is presently underpriced. During a speech at the National Institute of Security Studies (NISS), Shonubi asserted that economic analysis had verified this claim.

“In an analysis of Nigeria’s economy using purchasing power parity, it becomes evident that the naira is substantially undervalued at this time,” stated the temporary governor.

Shonubi pointed out that the diversion of money sent home by Nigerians living abroad from the official foreign exchange market as a significant reason for the naira’s poor performance against the U.S. dollar. Furthermore, he blamed certain Nigerian banks for exacerbating the depreciation of the naira through unauthorized dollar transactions. The acting governor threatened that the CBN would take action against banks believed to be involved in these prohibited sales.

In contrast, the International Monetary Fund (IMF) has purportedly laid the blame on Nigeria’s relaxed fiscal and monetary rules for the naira’s predicaments. Yet, Ari Aisen, the global institution’s representative in Nigeria, opines that the nation can still salvage the naira by enforcing more rigorous policies.

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Frequently Asked Questions (FAQs) about fokus keyword: naira

What is the new all-time low value of the Nigerian naira against the U.S. dollar?

The new all-time low value of the Nigerian naira against the U.S. dollar is NGN950 per USD as of August 9.

Who insists that the Nigerian naira is currently undervalued?

Folashodun Shonubi, the acting governor of the Central Bank of Nigeria, insists that the naira is currently undervalued.

What has the International Monetary Fund (IMF) said about the naira’s depreciation?

The IMF has reportedly blamed the naira’s depreciation on Nigeria’s “loose” fiscal and monetary policies.

Why might Nigeria consider abandoning the floating exchange rate regime?

The rapid depreciation of the currency and the ongoing shortages of the U.S. dollar on both formal and informal markets have led to considerations of abandoning the floating exchange rate regime that was adopted in mid-June.

What measures are threatened by the acting governor of the Central Bank against banks involved in “illegal” dollar sales?

The acting governor, Folashodun Shonubi, warned that the Central Bank of Nigeria would take action against banks suspected to be behind the unsanctioned dollar sales.

How does the IMF suggest Nigeria can give the naira a fighting chance?

According to Ari Aisen, the IMF’s representative in Nigeria, the country can still give the naira a fighting chance by tightening its fiscal and monetary policies.

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5 comments

Sarah_92 August 12, 2023 - 8:05 am

the imf has pointed it out clearly, why are the fiscal policies still loose? time to take control, Nigeria!

Reply
MikeInLagos August 12, 2023 - 10:07 am

This is just bad for everyone. the central bank needs to wake up. my savings are vanishing 🙁

Reply
NaijaQueen August 12, 2023 - 2:59 pm

Acting governer seems to know what he’s doing. But action speaks louder than words, lets see what he does about the illegal dollar sales.

Reply
HenryOlu August 13, 2023 - 5:16 am

Inflation, devaluation… its all getting worse. Where’s the light at the end of this tunnel? Praying for my country.

Reply
JamesCarter August 13, 2023 - 5:17 am

I can’t beleive how low the naira has fallen. Whats the govt doing about it. serious action needed!!

Reply

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