CBN: EXPERTS SAY INCREASED EXPORTS WILL HELP SOLVE THE CURRENCY CRISIS.

Economic experts have encouraged the Federal government and the Central Bank of Nigeria (CBN) to devise strategies and putting an end to round tripping, since severe FX scarcity is having a negative impact on the Naira.

They contend that an effective and adequate FX reserve will be produced through raising exports and decreasing imports.

After the local currency concluded trading on Thursday at N718 to the dollar as opposed to N710 to the dollar reported the day before, the Naira had fallen to a new low on the black market. The Naira fell by N100 in just 10 days, at N718 to $1.

On Thursday, July 28, 2022, official market exchange rate increased noticeably, with the Naira closing at N426.2 to the dollar, up from previous trading session's N430. The amount of foreign exchange transacted through the Investors and Exporters (I&E) window increased slightly by 1.93 percent to $129.13 million.

A scenario in which the CBN stops providing dollars to banks and instead expects the banks to be able to produce their own.

The Central Bank to provide a market-driven pricing that promotes investments in the Nigerian economy and ensures a stable exchange rate regime in the country hereby helping the stability of the foreign exchange rate of the country so that people can transact with ease.

The country foreign exchange has been a bit messy in recent weeks, moving from one exchange rate to another without being stable.

At the most recent Monetary Policy meeting, the governor of the Central Bank of Nigeria, Godwin Emefiele, ordered a halt of dollar sales to the nation's BDCs, citing worries about fraud and illicit activities in their operations as a major factor.

To combat growing inflationary pressure and promote FX inflow into the economy, the CBN increased the benchmark to 14% in July 2022 after making a similar 150 basis point hike in May. However, despite the top bank's action, the currency rate has not yet stabilized, putting additional strain on the nation's foreign exchange reserves.

Bureau De Change (BDC) operators responded to this situation by blaming a scarcity of FX and a rise in demand for the recent unchecked climb in the market. Some bank customers have since claimed that a shortage of liquidity has prevented them from accessing their funds in domiciliary accounts. They also urged the FG and the apex bank to look for methods to reverse the trend.

Moses Igbrude, a financial and economic specialist who spoke with Daily Sun over the phone, pointed out that the easiest way to reverse the trend is to boost exports, revive the Export Expansion Grant (EEG), and cut back on round-trip travel.

“This is pretty easy,” he said. You are aware that we use the naira as our currency rather than the dollar. We only require dollars when importing or when we have to pay for school expenses overseas. Now, you are limited to using the dollars that are in your reserve, which is the money from exports. Therefore, it makes sense to enhance our exports.