When the Euro, British pound and US dollar are not rising and falling in sync against the Naira, note that something is wrong. In a perfect market system, there will not be any information asymmetry problem as demand and supply can attain an equilibrium point based on an equitable knowledge base. My post yesterday, unbundling a big lie that the US government was phasing out its currency printed before 2021, was received by many as attacking the Naira. In other words, many wanted the fake news to remain provided it helps the Naira.
hy this? The Nigerian Naira is rising against US dollars on a solid rumour: “The improved supply has been attributed to market speculation bordering on unconfirmed reports that the U.S. is ramping up dollar notes printed before 2021, to mitigate the amount of dollars in circulation – a step similar to the one taken by the Nigerian government.” As a result, many people do not want to touch old US dollars, reducing demand and with that, the Naira is rising.
Good People, I did not get the memo. Indeed, many are happy if we can have a National Lie engineered by speculators (on reverse osmosis) provided it helps the Naira. Unfortunately, that is not the motivation for me to post here. I try to be balanced, fair and fact-based.
I call on the National Orientation Agency (NOA) to do its work in Nigeria. If we have gotten to a state where we will be happy with lies because it helps our currency (of course temporarily), it means we have a real problem to deal with in the nation.
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As I sign-off on this particular topic, get this from me: a sustainable strength of Naira will not come via National Lie on discontinuing old US dollars or the Central Bank of Nigeria fiat regulations, rather, the strength will come from warehouses and factories (old and modern types) in Nigeria. In secondary school, we learnt about that in AO Lawal’s textbook of Economics, specifically in the chapter titled International Trade. There, he explained the balance of trade and balance of payment. He used two key words – favourable and unfavourable to explain the right positining. Your nation must work for a favourable balance of trade and balance of payment.
I am hoping that we get to N200/$ to help me cover my investment in NaijaBigOffer which First Bank marketed to the Diasporas. I was a student at that time and I invested $20,000. That investment was at about N46 per share and Naira was sub-N200/$. If I have to get that $20,000 back to the US today, that investment will not be worth up to $2,000 because the share price, inflation and the currency have collapsed in tandem. This explains why a stable currency does everyone good. And I am hoping we find a path to make that happen instead of feeding on a big National Lie which can go both ways – help and destroy Naira.
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Whatever that is making the naira to appreciate against the dollar, it needs to continue non stop. Naira’s collapse wasn’t entirely empirical, so the same way it collapsed without no bearing on economics, let it also rise via the unknowns; afterwards we can revert to actual economics.
Again, money is a medium for exchange, but our compatriots have turned currencies into store of value in themselves, with that, they distort economic fundamentals.
You also need to understand that the intellectual world is bigger than the physical world, and your average compatriot isn’t well prepped for anything that requires some intellectual rigours, with such major deficit, the only thing left is to go hysterical.