Many comments on the Naira; thanks our amazing community for considering this Ovim village boy’s insights of value to seek his perspective. Yes, there is good news in the land; the trajectory of the Naira is promising as it is obeying gravity, trending downwards. The update is that it is hitting about N1,100/$, from the high of N1,700/$. Good People, we desperately desire that it returns to N650/$ which was the median market rate before the float.
I commend all the team members working to stabilize the FX rate. They have created a potent scenario, and that is the perception that the Naira could even get down to N900/$, …N600/$, and as a result, currency traders are afraid. With that, demand could go low!
There is a reverse osmosis in some quarters in Nigeria where some people with USD are swapping for Naira because they do not know how much the Naira could appreciate against the USD. That is a risk vector, just as I have written that the risk in Nigeria is NOT that the official and black FX rates are not the same, but that we have a huge FX fluctuation with broad price instability. So, even as it goes lower, a stable state is desired. But of course, we will want that state to be at the least point possible.
That said, it is not yet uhuru. I have written in the past that Nigeria has enormous resources to fight and win a short-term battle with special loans, collateralized commodities for cash, etc. Six months ago, I wrote: “Sure, Nigeria has tools which can bring Naira back to sub-N800/$ provided there is TRUST in the system. And the government can actually get Naira back to whatever number it wants with the US dollars. The real challenge is a long-term playbook. Yes, how do you keep Naira stable over a long-term view via endogenous policies which support Naira from inside to outside?” Simply, what we need is how to WIN the war on FX, not just the battles.
Since the Naira was introduced in 1973, there have been many battles, with some wins and many losses, but if you look deeper, we have continued to lose the war. So, over 50 years, we have moved from at worst N1/$ to now above N1,100/$. So, I challenge the team to get Nigeria on the path of winning the war of FX, and that can only come if we have clarity on how things could be made in Nigeria. Financial engineering, loans, assets sales, etc will only win the battle, but we need to win this war once and done.
Winning the war for Naira begins with 24/7 electricity, security in the land, improved rule of law, a mindset of innovation and making things in Nigeria. Good luck, Nigeria.
