As naira takes a hit cbn rules out devaluation
I think there may be some confusion here!
The Central Bank of Nigeria (CBN) has not ruled out devaluation of the naira. In fact, the naira has been experiencing a significant depreciation against major currencies, including the US dollar, in recent times.
On February 20, 2023, the naira hit a record low of 740 per US dollar on the parallel market, also known as the black market. This is a significant depreciation from its official rate of around 360-370 per US dollar.
The CBN has been trying to stabilize the naira by intervening in the foreign exchange market, but the currency's value has continued to decline due to a combination of factors, including:
- Low foreign exchange reserves: Nigeria's foreign exchange reserves have been declining due to a large trade deficit and a lack of foreign investment.
- Inflation: High inflation rates in Nigeria have eroded the purchasing power of the naira, making it less attractive to foreign investors.
- Economic challenges: Nigeria's economy has been facing challenges, including a decline in oil production and revenue, which has impacted the country's ability to import goods and services.
While the CBN has not ruled out devaluation, it has been trying to manage the situation by implementing various measures, such as:
- Intervening in the foreign exchange market to stabilize the naira.
- Increasing the supply of foreign exchange to meet demand.
- Encouraging foreign investment through various incentives.
However, devaluation remains a possibility if the CBN is unable to stabilize the naira and address the underlying economic challenges.