In response to the naira’s recent steep depreciation against the dollar, reaching a record low of $1,310 to 1 US dollar, the Federal Government of Nigeria has initiated steps to address the ongoing currency challenges. The government is reportedly making efforts to bridge the dollar supply gap that has contributed to the devaluation.
According to reliable sources, the government is engaging with individuals and entities that have been hoarding dollars, along with those suspected of looting public funds, in an attempt to encourage them to bring their funds into the formal market. The government is committed to doing whatever is necessary to resolve the issue.
These actions are central to two Executive Orders recently signed by President Bola Tinubu, aimed at ensuring liquidity in the country’s foreign exchange market, stabilizing the market, and supporting the appreciation of the naira, which has been experiencing a decline against the US dollar in recent weeks.
While the specifics of the Executive Orders have not been made public and are yet to be officially gazetted, the overall objective is to encourage the hoarders of dollars to reintroduce them into the formal economy.
A senior government official stated that the decision to withhold details from the public is deliberate, aimed at minimizing distractions and maintaining the focus on stabilizing the naira.
The official emphasized that these efforts are in the best interest of Nigerians and that the government is even prepared to engage with those who may have contributed to economic challenges, if it leads to the economic revival and poverty reduction.
President Tinubu has assured the business community that plans are in place to improve foreign exchange liquidity. He pledged to honor legitimate contracts related to foreign exchange obligations, thereby upholding the rule of law and fairness.
Prior to these recent interventions, the Nigerian National Petroleum Company Limited secured a $3 billion crude repayment loan in August to support the naira and stabilize the foreign exchange market. Despite such efforts, the naira has faced consistent depreciation, leading to rising prices of goods and services.
The parallel market has witnessed significant fluctuations in exchange rates, reaching as high as N1,310 to 1 US dollar, before appreciating slightly in the following days. On Friday, the naira made notable gains, exchanging for N1,150 per US dollar, affecting speculators who had bet on further depreciation.
During the 29th Nigeria Economic Summit, the Finance Minister highlighted expectations of a $10 billion forex inflow in the coming weeks, attributing this to factors such as increased production, reduced forward sales transactions, discussions with sovereign wealth funds, and ongoing investments in the country’s oil sector.
