Fake news is bad but fake news could be strategic under national security. As you read Russian and Ukrainian news sites, one thing is clear: disinformation, misinformation and fake news are all parts of warfare. The smartest fake news for me ever was the one the Iranian government offered to its citizens when a US drone killed an Iranian general in Iraq.
Iran “responded” by firing missiles to a US base in Iraq. It then went on air in Iran to claim that it killed dozens of US soldiers, serving “justice” for the general. The Iranian citizens believed and jubilated; calm returned. It was all fake news as the missiles did not get to the base, and also, Iran informed Iraq that it was about to fire them, and told everyone to clear the area.
Why 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.
Tekedia Mini-MBA edition 14 (June 3 – Sept 2, 2024) begins registrations; get massive discounts with early registration here.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
Fundamentally, nothing has changed. But no matter what, we need to be happy that Naira is getting some help – rumour or not. It has come down from 1,000/$ to about 680/$ now. I hope it goes down to N200/$ so that we can do reverse osmosis.
This triggered the jump of other currencies, particularly the yen, which has dropped 22% against the dollar this year, and the pound. The yen gained about 1.6% against the dollar, while yuan rose by as much as 1.3% to hit its highest in over a month against the dollar. The pound rallied 1.1% against the dollar to $1.1839, while the euro moved up to 1.5% to $1.0356, its highest since August.
But the naira gained far more than other currencies due to improved dollar liquidity in Nigeria’s FX market. 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.
BDC operators said there has been an uptick in dollar supply and low demand in the parallel market as dollar hoarders hurry to sell off their stockpile to avoid getting caught in the rumored U.S. plan.
Comment on Feed
Comment 1: What I want to know sir is why euro and pounds are also increasing? I feel the demand for dollars is far more higher than them so dollar should increase alone or at least increase more than them.
My Response: “What I want to know sir is why euro and pounds are also increasing? ” because there is no rumour that Brussels and London are planning to change/mop currencies. Only USD has that rumour now and that is why it is struggling. Your comment confirms the ascension is not based on any fundamental, otherwise Euro, GBP and USD will rise/fall in sync.
Comment 2: Thanks Prof as always, but I love this kind of fake news, because the fall was just too much.
Naira falling always weaken me despite being in the UK as we have plans to invest in Nigeria and FX has always been a concern.
Ndubuisi Ekekwe How can the government profer a lasting solution to the black market to restore some sanity to the Naira?
My Response: “How can the government profer a lasting solution to the black market to restore some sanity to the Naira?” – the strength of Naira comes from warehouses and factories. So, we need to have them in Nigeria.
Comment 3: Maybe our FG should approach the US Feds with an express proposal: volunteering to pay for dollar redesign. This would be much cheaper than spending billions of dollars fighting to defend the naira. Just pay for dollar redesign, and all the dollars hidden by Nigerians in raw cash across the globe will come outside. Who knows, naira could exchange for N250 for a dollar, and we will all live happily ever after.
Our exchange rate is never real, what is even real in Nigeria? You can still spot fake humans here, fake petrol subsidy payment, fake politicians, fake population figures. A strange land filled with lots of strange people.
Let the rumour continue, it’s a very positive rumour for our sorry naira.
Comment 4: My neighbor went to the bank last week to deposit some dollars into his domiciliary account. The notes below 2021 were rejected. Were banks acting on this speculations too?
Comment 5: Never sustainable in the long term. This is a perfect market and information is not assymetrical in any way.
---
Register for Tekedia Mini-MBA (Jun 3 - Sep 2, 2024), and join Prof Ndubuisi Ekekwe and our global faculty; click here.