About a month ago, the exchange rate of the Naira to the US Dollar, both on the official window and parallel markets, hovered around 1900 Naira per USD. Speculators were anticipating it to reach 2000 NGN/USD, which led to a daily increase in the rate, subsequently inflating prices. However, today, to the satisfaction of some and the dissatisfaction of others, the rate has stabilized around 1400 NGN/USD. What led to this stabilization? Was the Nigerian economy under attack by enemies of the state, and who saved it from impending chaos?

President Bola Ahmed Tinubu and CBN governor Olayemi Cardoso have been praised for their "Jagaban-omics" intervention, which controlled the issue. Indeed, the combined intervention of the Federal Government and CBN achieved this current stability, but through what means? Should Nigerians feel secure or be wary of the current situation? Use the attached links for news references.

Initially, one month after assuming office, President Tinubu's government, through the CBN, carelessly floated the Naira by removing all policies and structures previously used to artificially set rates. This move meant that market forces would determine the Naira's true value.
(CBN Floats Naira)

That is exactly what happened. The market forces were loud and clear that the currency is worth less than the value it was priced at and the Naira free-fall began. Why would the Federal Government float the currency without adequate analysis, planning, or investment to bolster the economy and the country's value? This decision was not surprising for a government that removed fuel subsidy in the inaugural speech.

The Federal Government and CBN who realised that the malnourished dog they brought to the dog fight has been beaten blue-black now decided to fight for their dog. "Malnourished dog" in the sense that, since 2022, accompanied by pre-existing weaknesses, the Nigerian economy had become highly unattractive to foreign investment. Negative FDI rates were recorded for the first time since 1995, several multinationals exited the country, and a substantial trade deficit was reported in Q4 2023. Nigeria was failing to attract sufficient foreign interest or money to withstand negative market pressure on the currency.
(Negative FDI)
(Multinationals dump Nigeria)
(Trade Deficit)


The Federal Government and the CBN made the following interventions in a bid to "fight for their dog":

1. They arrested Bureau De Change Operators using the EFCC and Police, turning businessmen transacting legal business into overnight criminals over alleged unfounded claims of sabotage.
(EFCC arrests BDCs).

2. The government launched a clampdown campaign against Binance, a foreign crypto exchange, resulting in the delisting of P2P markets for Naira on Binance and the controversial kidnap detention of Binance executives without charge.
(FG arrests Binance Execs.)

3. The most significant intervention involved going back to their vomit with the resumption of artificially fixing the FX rate. The CBN resumed selling the Dollar directly to select Bureau De Change operators below the prevailing market rate, which was discontinued in 2021. Understanding the influence of the parallel market, this intervention forced the rate down. The CBN maintains this artificial stability by selling $15m to BDCs weekly.
($15m per week.)


The question arises again. Should Nigerians feel secure with temporary solutions that fail to address the underlying problem? The answer is a resounding NO. Instead of engaging in senseless propaganda of claiming this or that is a genius that conquered the market, Nigerians should demand accountability from their Government. What will happen when the government can no longer afford these artificial and temporary solutions? Dollar will skyrocket even more. Where does the dollar, sold every week at cheap prices, originate, and what is the actual cost to the country to maintain this fake lifestyle fake exchange rate? Has the government failed on its election promise to remove costly subsidies and increase spending on critical sectors like security, infrastructure, and education?

The truth will always outlast propaganda.

The government launched a clampdown campaign against Binance, a foreign crypto exchange

They arrested Bureau De Change Operators using the EFCC and Police

CodeTemplar:
Selling to BDCs below current rates doesn't automatically mean Naira is being defended.
The govt has to sell low if they feel the Naira is undervalued and higher if otherwise.

The key is getting where(price value) the demand equals supply from govt and private sellers.

helinues:
More like some people have been in depression since Naira started regaining strength, their evil wishes are not coming close to pass hence panicking and teeth gnashing

chigator2:


Some people like taking panadol for the fever instead of treating the Malaria once and for all. It's shameful.

South Korea has a worse exchange rate with Dollar than Naira, so why are we lossing money to defend artificial price to please people

chigator2:


Some people like taking panadol for the fever instead of treating the Malaria once and for all. It's shameful.

South Korea has a worse exchange rate with Dollar than Naira, so why are we losing money to defend artificial price to please people

helinues:


You guys don't have an idea about the effects of arresting terrorists sponsor, bdc operators hoarding dollars and the Binance which came to manipulate the rate by buying large dollar to cause scarcity.

Make una stop coming up with thoughts that are not well thought

chigator2:


The key to understand something is to reason about the intrinsic logic behind that stuff. You may not be familiar with geopolitics and currency manipulation so I wont hold it against you.

Ask yourself, why would the Nigerian government get hard currency from wherever and make a huge loss of over 400 Naira per dollar in selling to BDCs. If you trade stocks, forex etc, you will know that if a whale places a limit order at a very good price below or above current price, the market price will move to meet that order. In essence someone can not be offering me dollar at 1300 and I will go and buy for 1700, and if I want to sell the dollar, I will not sell dollar I bought at 1300 (even if I bought it 2k) for 1900 because competition will make my neighbour try to sell as cheap as possible. Right there, the government has artificially set the price at their own loss.

Do you know that China is a big currency manipulator. China manipulates their currency value to remain relatively low because they export a lot of products, if the Chinese currency takes it's true market value, it will become more expensive for foreigners to buy these Chinese products so their money will go to cheaper alternatives from India, Malaysia, Thailand or Vietnam. A good thing can cause harm.

Here we are manipulating currency to increase propaganda not productivity.

CodeTemplar:
logic also should tell you if a person sells at a loss for too long, that person will run into bankruptcy. Leave water to find its level(equilibrium) and stop sounding like a speculator who bought dollar at around N1900 with loan money.

JoeyNaza:


You don find the one wey sweet for your mouth. How about selling dollar at a loss every week.

HopeUzodinma:
How long will this government continue this charade?

Dollar will exchange for #2500 when this nonsense finally ends..

helinues:
Simple basic economics.

What caused the high rate of dollar ? Scarcity

Who caused the scarcity? some BDC operators, Terrorists sponsor, Binance, government too.

Now that those horading the dollar have been arrested, that means there would be more dollar in circulation hence rate reduction.

chigator2:


Who taught these people economics, if BDCs decides not to sell dollars for 2 years, my friend Dollar is a global reserve currency for a reason, foreign interests will flood this country with their own dollar.

You didn't read the writeup, if not you will understand that if you go to the market and a cow seller tells you he is selling his 25kg cow at the price of a 50kg cow, you will bargain and price it down to it's real value. Everything that happens after that is after effect and panic because in free market, Naira is worth less than 2000 NGN / USD so any reasonable person will hoard their dollar till it reaches true value.

helinues:


Where do BDC get their dollars from? BDC decides not to sell dollar. Jesu

Abeg trading is different from economics

helinues:


Where do BDC get their dollars from? BDC decides not to sell dollar. Jesu

My guy no even no the meaning of BDC..

Abeg trading is different from economics

Madmohamedslam:


But wait helinues are you trying to tell me this is the reason you are useless?

chigator2:


Education has taken new lows in Nigeria so I remain not surprised. Prior to re-including BDCs in monetary policy for this currency scheme. BDCs got their dollar from transacting with the public and through back yard deals with commercial banks which notable experts have exposed and condemned.

The problem is not CBN selling directly to these people but it's the fact that they do it at a rate that artificially brings down the value of the dollar.

I shouldn't be arguing with people like you, you know why ? Because time always proves the truth right. We called out Buhari for 8 years over incompetency and failure, you coated your short-sightedness, bigotry and tribalism with all sort of excuses, deflections and jibes yet today we are vindicated. Continue defending rubbish, give it 10 years, your collective stupidity will manifest before your eyes.

The rest of sensible Africa is making giant strides but here their entire world revolves around Lagos. If Lagos builds a railway that was built in Indonesia 20 years ago, the entire country thinks they've made progress. Fools

CodeTemplar:
Selling to BDCs below current rates doesn't automatically mean Naira is being defended.
The govt has to sell low if they feel the Naira is undervalued and higher if otherwise.

The key is getting where(price value) the demand equals supply from govt and private sellers.

Godoverevery:


Both Peter obi and atiku ain't even criticizing this move by cbn but you feel you know more than everyone.

If cbn is actually defending the naira you think Peter obi and Atiku won't have alarm everyone??

All top economist on TV are in full support of this particular move even a former deputy CBN governor came out to give a positive review do you know more than them


Until I see a credible top economist come out to critic this cbn policies you are all what you wrote is invalid.

ValarDoharis:
The naira is being defended at a higher price making it penny wise, pounds foolish

chigator2:


You think I am one of those that subscribe to your politicians like Peter Obi and Atiku. They both know that what Tinubu is doing now is what was happening before during Emefiele era, tinubu stopped it and have seen that it can't work and ran back to the old way. So what is there for them to condemn.

Tell me who would want to come out to tell hungry angry Nigerians that they are indifferent to dollar rising.

But what is stupid is to tell me that FG is not defending Naira. So Dollar dropped from 1900 in one month because all your imaginary factories started working, Dangote refinery brought in revenue, Multi -nationals are trooping or as Odumeje said, he used Abido Shaker to reduce dollar. Don't be naive.

Experimental design will tell you that if whenever I add B to A, C happens then there is a causal relationship between B and C that can either be proven or disproven but can't be disputed.

Godoverevery:


Both Peter obi and atiku ain't even criticizing this move by cbn but you feel you know more than everyone.

If cbn is actually defending the naira you think Peter obi and Atiku won't have alarm everyone??

All top economist on TV are in full support of this particular move even a former deputy CBN governor came out to give a positive review do you know more than them


Until I see a credible top economist come out to critic this cbn policies you are all what you wrote is invalid.

Godoverevery:


Professor in economics well done.

I didn't bother reading all those epistle you wrote.

So Peter obi and atiku are politicians and all the economist talking on TV stations like Arise etc are politicians aswell....they are all afraid to tell Nigerians the truth...lol

Well done.

chigator2:


For about the act itself, my problem is the long term sustainability. FG is spending $15m per week now, what happens if the true value of naira pushes lower, that 15m would have to become 25m to maintain price around 1400 and so on. Meawhile we can concentrate efforts towards the real problems.

The North will brag about their vast lands yet Nigeria can't become an agriculture powerhouse because the government has failed them in insecurity and lack of subsidised farming yet we are paying for subsidy in every angle. It is like blackmail, it will never stop and may only increase until you handle the matter or person they are using to blackmail you.

chigator2:


Ohh I see, you are one of those they spoon feed on TV. If they don't tell me on TV then I won't think. Grow up. Typical black man.