The Nigerian naira hit an all-time low on Wednesday as it traded at N920 to a US dollar on the parallel market, figures captured at AbokiFX showed.
This comes after the Economic Intelligence Unit (EIU), in July predicted, among other things, that the currency would trade at N1,018 to a U.S. dollar in 2027. A situation that prompted the research and analytical unit of the Economic Group to predict a return to a CBN-controlled exchange rate regime.
EIU had said that a return to the fixed or regulated control exchange rate system was because of a lack of sufficient experience in tackling the difficult challenges of obtaining a fair value of the naira without hurting the economy.
“The CBN lacks experience in conducting monetary policy under a float, and the need to control rapidly increasing inflation will become more acute over time.
“Our forecast is finely balanced, but we expect a return to heavier exchange-rate management from the second half of 2023 as the naira slides beyond N800:US$1 from N770:US$1 in early July,” EIU was quoted as saying by Business Day.
The research company also admitted that the high rate of liquidity of the country’s FX reserve, which stands at $33.2 billion, puts the CBN in a good position to prevent the currency from falling to a point where it is almost impossible to redeem.
Speaking at his ministerial nomination interview session that was televised to more than 50 million Nigerians, Wale Edun, a finance expert, special adviser to the president on monetarily policies, and close confidant of President Bola Tinubu had suggested that the true value of the currency should be N700 per US dollar, as against the parallel market rate of N820 at that time.
“It is difficult to predict because the capital markets take all the liquidity of their own. I want to say that the fundamental value of the naira should be somewhere around N700/$1,” Edun said.
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