The naira yesterday continued to appreciate against the dollar and other major currencies due to the continuous release of funds by the Central Bank of Nigeria.(CBN).The previous day there was a slight drop but yesterday regained its strength as it exchanged at N385 to dollar in the parallel market. Bid-offer spread widened as much as N15 on the black market after the currency gained 4.9 per cent on Wednesday to a seven-month high. It was as firmed as much as N385 on the black market. Others quoted N406 to the dollar. On the official market, the naira was quoted at N308 per dollar on Thursday and traded with a spread of N0.50. The reason for the naira recovery came after more than $1.4 billion interventions by the Central Bank of Nigeria (CBN) in the interbank market.
President, Association of Bureaux De Change Operators of Nigeria (ABCON) Aminu Gwadabe, said he expected the naira to stabilise around N380 to N400 to the dollar, but added that the CBN must review the multiplicity of rates.
The question is how long will this intervention from the Central Bank Of Nigeria last? is it as long as this current regime last? this kind of intervention according to analyst can only sustain the currency for a while as the main brain behind the strenthening of any currency is industrial production.
The government of the day neglects the critical sector of the economy now focuses on central bank of Nigerian giving liquidity to users. For those who know how the system runs will be watching the policy play out. Certain factors are always responsible for any currency of a nation to be strong. the government should encourage investors to come in and do their investments in the country. when such investments are striving the Naira will naturally appreciate. What is sending the dollars down now is speculators. currency speculators will want to buy at a very low price and sell at a profit. some will be doing panic selling which most times is the case even in stocks.
In my own view the Naira will keep appreciating as CBN continue to pump dollars into the market, it is a simple economic principles of demand and supply. when there is no more supply the Naira will depreciate.
The only solution to the stability of the Naira is for the Government to do more by encouraging investors into the country to invest in the critical sectors of the economy, improve power supply and security. if this is done the Naira will naturally become strengthened.
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