It is no longer news that the Naira has depreciated in value in the recent weeks. This is the widest gap between the free market value and the Central Bank of Nigeria’s rate in the history of the nation. Who exactly is to blame for the abysmal performance of the naira?
This dollar/Naira debate is very interesting and it is a time to educate ourselves on the real situation of things. Austyn Ogannah, the Publisher of respected online news website, The Will (www.thewillnigeria.com), recently shared his thought on his Facebook page. Read what he said:
The exchange rate talk today is simply the price of the dollar to the naira. And with every price, it is determined by the forces of demand and supply. When supply decreases (think of a fall in supply of yams because of poor harvests), the price will rise (in case of exchange rate, means you need more Naira to pay for one dollar). Also when demand rises (think yams again during yam festivals) the price will also rise.
90% of dollar supply in Nigeria comes from our sale of crude oil. Unfortunately (and no fault of CBN, President Buhari or anyone) the price of crude oil has fallen from $128/barrel to only $38/barrel. So the price of dollar would have to rise against the naira! Simultaneously, Nigerians demand way more dollars than any other country because we import anything and everything (again this is not the fault of President Buhari or the CBN). This heightened demand has also increased the price of dollars.
I wish the CBN prints dollars, then we can blame the Bank and its Governor. But until we learn to produce most of what we consume here in Nigeria, we will have to live with the consequences of our laziness (we import bananas from Cameroon), indulge in lavish live styles (many weddings and parties now mostly serve Crystal, Don Perignon, Verve and Moët champagnes), we are a people that encourage waste and show off. Collectively, everyone MUST share the blame for the current exchange rate… PERIOD….