“Nigerian Government should seek a $10billion currency support line from its trading partners; set a limit for the falling Naira, fix infrastructure and pursue the diversification drive with vigour”.
These are the pieces of advice offered by a cross-section of Nigerians on how best to salvage the Naira, whose worth continues to fall like a heavy Lead at the black market.For instance, as at yesterday, it was quoted at N455 to the dollar on the black market. Even last month,the currency was sold at N495 per dollar. “From a technical standpoint, the Naira is heavily bearish and this negative momentum could open a path towards 500 and potential higher against the Dollar on the black market exchange”, says Lukman Otunuga, a Research Analyst with Forex Time (FXTM) on an online investment note.
How can the nation reverse this trend?
Mr. Johnson Chukwu, the Managing Director of Cowry Assets Management Limited, advised the Federal Government to seek bilateral or multilateral loans to buffer the currency since the CBN can not do so.
His words: “The only thing government can do is to enter into agreement with a multilateral financial agency or a bilateral financial agreement with one of our trading partners to provide financial support, budget support or currency support line of a minimum of $10billion to the government through central bank so that the government will be in a position to meet legitimate demand for forex. The key thing is that confidence has been punctured.
Investors , both local and international, complain that we dont have the reserves to meet all the maturing obligations or all our obligations. So they are not bringing in their money. If we want that change, we need to get a currency or budget support line that is huge enough, that is large enough to ensure that we, as a country, can meet all foreign currency obligations as they are unfolding.As of today, CBN can no longer convince both international and local investors, that it has the muscle to do that. So it has to leverage on entities such as multilateral financial agencies like the World Bank, the IMF,bilateral partners like China or any of them to give the investing public that confidence that the country have the resources to meet all its obligations.”
He, however, warns: “If the situation persists, the contracting economy will accelerate, so you are going to have a high level contraction.If we do not stop the deterioration in the exchange rate because most companies can no longer afford to bring in their raw materials and equipment they need for manufacturing purpose.The cost of consumables is going to adjust upward to the level that majority of Nigerians can no longer afford to buy basic necessities of life.”
Professor Garba Sheka, Professor of Economics at Bayero University, Kano, advised that Nigerians should shun patronage of foreign goods in order to conserve the scarce forex.
As for Professor Olanrewaju Olaniyan of Economics Departmnet of the University of Ibadan,the monetary authority should close the exchange rates gap between the official and black market.