Falling Oil Prices:

Nigeria is a major oil producer, and oil exports are its primary source of foreign currency earnings. When oil prices fall, the inflow of dollars into the country decreases, putting pressure on the naira's exchange rate.
Global oil prices have been declining since mid-2022 due to economic slowdowns and increased production in other countries. This has significantly impacted Nigeria's foreign currency reserves and contributed to the naira's depreciation.
2. Dollar Demand:

High import dependence: Nigeria relies heavily on imported goods, from food and machinery to fuel and consumer products. This creates a constant demand for dollars to pay for these imports.
Capital flight: Uncertainties in the Nigerian economy and rising inflation can lead to capital flight, where investors move their money out of the country, further increasing the demand for dollars and putting downward pressure on the naira.
3. Currency Policy:

The Central Bank of Nigeria (CBN) has adopted a flexible exchange rate policy, allowing the naira to fluctuate based on market demand and supply. This can lead to volatility in the exchange rate, especially when there are significant imbalances in demand and supply.
Recent attempts to clamp down on the black market for dollars through currency restrictions have had limited success and may have even exacerbated the depreciation by pushing demand toward informal channels.
4. Inflation:

Nigeria has high inflation, which erodes the purchasing power of the naira. This makes dollar-denominated assets more attractive, further increasing the demand for dollars and putting pressure on the naira.
The devaluation of the naira itself can also contribute to inflation as the cost of imported goods rises with the exchange rate.
5. Other factors:

Political instability and security concerns can also deter foreign investment and contribute to currency depreciation.
Structural challenges in the Nigerian economy, such as dependence on oil, inadequate infrastructure, and governance issues, also play a role in the naira's weakness.
It's important to note that the situation is constantly evolving, and these are just some of the key factors contributing to the depreciation of the Nigerian naira. Addressing these issues will require a comprehensive approach that tackles the underlying economic and structural challenges, while also managing currency policy and reducing reliance on oil exports.
Written by Steve
fishc276@gmail.com

Bros no dey yan shit, tinubu keep am their cause say he still need to borrow so when he do exchange e go be ×2

Rubbish!!

Tell the certificate forger to get to work!

Or is he trying to forge the economy as well?

*
Politicians looting the poor and worthless Naira and using the proceeds to mop up whatever Dollar is available and at whatever price possible.

Even your President's stash is in Dollars.

You no reason this one ba?

You are a liar
Tinubu messed the economy up by sudden removal of fuel subsidy and lack of proper economic planning

Somebody, please summarize...🤐

The current CBN governor has only a first degree without any relevant experience but belongs to more than 20 social clubs. Is that the kind of experience that will revive the naira? Stop giving excuses for this mentally lazy and incompetent people in this government

Rubbish talk.
Why is CFA stronger than naira?

You missed the two main reasons.

1) Corruption in government

2) Incompetent leadership esp the presidency!

stevnwigw1:
Falling Oil Prices:

Nigeria is a major oil producer, and oil exports are its primary source of foreign currency earnings. When oil prices fall, the inflow of dollars into the country decreases, putting pressure on the naira's exchange rate.
Global oil prices have been declining since mid-2022 due to economic slowdowns and increased production in other countries. This has significantly impacted Nigeria's foreign currency reserves and contributed to the naira's depreciation.
2. Dollar Demand:

High import dependence: Nigeria relies heavily on imported goods, from food and machinery to fuel and consumer products. This creates a constant demand for dollars to pay for these imports.
Capital flight: Uncertainties in the Nigerian economy and rising inflation can lead to capital flight, where investors move their money out of the country, further increasing the demand for dollars and putting downward pressure on the naira.
3. Currency Policy:

The Central Bank of Nigeria (CBN) has adopted a flexible exchange rate policy, allowing the naira to fluctuate based on market demand and supply. This can lead to volatility in the exchange rate, especially when there are significant imbalances in demand and supply.
Recent attempts to clamp down on the black market for dollars through currency restrictions have had limited success and may have even exacerbated the depreciation by pushing demand toward informal channels.
4. Inflation:

Nigeria has high inflation, which erodes the purchasing power of the naira. This makes dollar-denominated assets more attractive, further increasing the demand for dollars and putting pressure on the naira.
The devaluation of the naira itself can also contribute to inflation as the cost of imported goods rises with the exchange rate.
5. Other factors:

Political instability and security concerns can also deter foreign investment and contribute to currency depreciation.
Structural challenges in the Nigerian economy, such as dependence on oil, inadequate infrastructure, and governance issues, also play a role in the naira's weakness.
It's important to note that the situation is constantly evolving, and these are just some of the key factors contributing to the depreciation of the Nigerian naira. Addressing these issues will require a comprehensive approach that tackles the underlying economic and structural challenges, while also managing currency policy and reducing reliance on oil exports.
Written by Steve
fishc276@gmail.com

stevnwigw1

You tried with your answers.

However, the primary treason why the Naira is depreciating is because the CBN has refused to raise interest rates high enough to soak up 3xcess money in the system which will not only reduce inflation (as there is less money) but also lead to an appreciation of the Naira as there's less Naira now to buy forex. This in economic parlance is called "tight money " Presntly, the CBN is practicing a loose money policy in an economy already sufder8ng from double digit inflation.

To explain it better, the CBN rates are 18% while inflation is 28%. So, if you invested 1m in treasury bills, you will get 1.18m at the end of the year. Meanwhile, the car that was sell7ng for 1m is now 1.28m.

You can see the problem. If interest rates rise to 30%, people (banks, pension funds, insurance firms etc) will buy up treasury bills taking money out of circulation. Trust me, within, 30 days, the Naira would hit 1,100 if not 1,000 at the black market.



The suspicion is that Tinubu wants low interest
rates to aid businesses but sadly, it is stoking inflation and currency depreciation. Tinubu seems to believe that once the $7bn unmet forex contracts are paid, the currency would stabilize and even strengthen. However, the low negative rates will destroy any confidence in the Naira and any new fx will quickly vanish as people prefer to hold money in dollars or other assets to protect the value of their money.

Japa syndrome is the major issue too. Everyone selling their properties and converting their money to $$ before relocating.

Oil almost half the current price during Obasanjo regime and Naira didn't fall. The major reason why we are having this free fall is the reckless printing of Naira and minting of eNaira. Research or ask questions from relevant authorities/ bureau de change agent before you write except if you are paid to distort facts. You heard present Governor of Edo complained about the reckless printing, nothing was done. Efcc sent warning that 3 Governors were planning to pay December 2022 salary with cash, it didn't tell you that something was wrong, Emefiele woke up and decided to change the currency over night and you think he was mad, he wanted to control the excessive liquidity in the market and he failed. Now the chicken has come home to roast and you are making this weak excuse for a government that doesn't care about you.
Ask yourself were all those cash with those governors went. Were are the eNaira that was minted? Who is keeping the eNaira?
Tomorrow is Monday, over 500m is in Abuja Street looking for dollar to buy, source of money politics.

princepee:
Rubbish talk.
Why is CFA stronger than naira?

That's the worse part

All your points above are purely academic. The real reasons are Corruption in high places.
Obviously, the funds gained due to removal of fuel subsidy should have sufficiently stabilized the economy and the exchange rate. The reality is that most of the rogues who manoeuvred themselves to power are not wasting time in looting the treasury. All those who have post election litigations gave out staggering sum of money to corrupt judges and lawyers in order to acquire favourable judgements. Most state governors have nothing tangible to show on how the initial 5 billion naira palliative was spent. Corruption in high places is destroying the country's economy.
We cannot also ignore the sharp practices at the BDC. How the alhajis have dollars to sell at overbloated rates yet BDC has no dollars must be investigated. Otherwise it is obvious that a lot of racketeering is taking place

grandstar:
stevnwigw1

You tried with your answers.

However, the primary treason why the Naira is depreciating is because the CBN has refused to raise interest rates high enough to soak up 3xcess money in the system which will not only reduce inflation (as there is less money) but also lead to an appreciation of the Naira as there's less Naira now to buy forex. This in economic parlance is called "tight money " Presntly, the CBN is practicing a loose money policy in an economy already sufder8ng from double digit inflation.

To explain it better, the CBN rates are 18% while inflation is 28%. So, if you invested 1m in treasury bills, you will get 1.18m at the end of the year. Meanwhile, the car that was sell7ng for 1m is now 1.28m.

You can see the problem. If interest rates rise to 30%, people (banks, pension funds, insurance firms etc) will buy up treasury bills taking money out of circulation. Trust me, within, 30 days, the Naira would hit 1,100 if not 1,000 at the black market.



The suspicion is that Tinubu wants low interest
rates to aid businesses but sadly, it is stoking inflation and currency depreciation. Tinubu seems to believe that once the $7bn unmet forex contracts are paid, the currency would stabilize and even strengthen. However, the low negative rates will destroy any confidence in the Naira and any new fx will quickly vanish as people prefer to hold money in dollars or other assets to protect the value of their money.

I beg to differ. Despite the high double digits inflation rate in Nigeria, our economy is sluggish. Only few people have access to money. Unemployment rate is high. Poverty index is high. Our industries are not producing due to many reasons. If the CBN increases interest rates, our economy will go into depression because of the unavailability of cash since the little economic activities in the informal and formal sectors of our economy will be starved of funds. Remember what happened during the cash crunch during Emefiele's tenure.

Secondly you should take another look at your illustration. What is 1.18M? Is there such a thing as 1.18M? Thirdly yes, commercial or bank interest rates affect the treasury bonds interest rates. However the fact is that the higher the commercial interest rates are the lower the treasury yields will be. You have mixed up commercial interest rates with the interest or yield from buying treasury bonds.

The solutions to our economic crisis is the following:
1. The FG should immediately restructure our external and internal debt. The interests the government is paying is bleeding us out. The debt servicing on our budget is very high. We need to ease the pressure and free up funds to invest in building our infrastructure and ramp up our production capacity.
2. Channel surplus funds into building local refineries and upgrade our mines. The billions of dollars the government spends monthly on fuel importation is bleeding us out. To think that the costs are inflated over 60% goes into private hands is sickening.
Y'all should know that the most of the monies from minerals being mined all over Nigeria doesn't enter into the government coffers. The proceeds are 10X what we get from selling crude.
3. Stop foreign currency arbitrage. Like the allocation of oil blocks, this is one way of aiding people to become billionaires in dollars over night. Everyone connected is doing it. So it's in their interest that there should exist a huge disparity between the official FX rates and the parallel market rates. Steady cashing out to the detriment of the nation's economy.
4. Reduce Government expenditure.From the legislature, judiciary, Civil service, Armed Forces etc, the cost of funding these guys are astronomical.
5. Declare a state of emergency on the manufacturing sector. We have the raw natural resources that the world needs. We are selling them at ridiculously cheap prices. We need to start doing value additions. Process these raw materials and sell at a good margin. Fund entrepreneurs, create a simple exporting process. Huge forex will come in reducing pressure on the Naira.
6. Start prosecuting corruption and let the penalty be hanging or life imprisonment. People will seat up.

Will dey do it? Doubt it cos the current system favours them personally.

When you have wicked satanic leaders, this is what you get.

Abeg make l go buy Dangote refined diesel put for my Generator.