According to reports, plans have been developed by the Central Bank of Nigeria (CBN) to halt the naira’s unrelenting depreciation against the dollar.
To flood the market with dollars is one of these tactics.
The naira ended the trading day on Monday, August 14 at N744.41/$ at the Investors and Exporters (I&E) window and N935/$ at the parallel market.
Since June, when the Central Bank of Nigeria (CBN) adopted a unified exchange rate structure and collapsed all rates into the I&E window, the naira has lost over 40% of its value.
According to a CBN board member who allegedly spoke with THE Nation, the bank will now inject foreign currency into the market to stabilize the exchange rate.
The purpose of having reserves to stabilize the naira at any time is that it will be a desirable thing. “.
It is desirable to support the naira at this time, he continued, adding that the choice is “a management routine function. “.
The board member claimed that in order to prevent the naira from losing more value, it is best to “as much as possible flood the market with foreign exchange.”.
Although I’m sure the current administration did not want any demand management policies, they are now necessary.
“If they are running a free market, the demand is overwhelming, and you have to manage that demand, restrict that demand with specific policies.
“Since there is a severe shortage of foreign exchange, the issue must be addressed from both the supply and demand sides.
