The Nigerian naira reached an unprecedented nadir on Wednesday, plummeting to an alarming N920 against the US dollar in the parallel market.
This downward spiral follows a prior prediction made in July by the Economic Intelligence Unit (EIU), wherein it foresaw the currency trading at an even weaker N1,018 to a US dollar by 2027.
This dire forecast has prompted the Economic Group’s research and analytical division to anticipate a return to a Central Bank of Nigeria (CBN)-controlled exchange rate system.
The EIU rationalised its projection of reverting to a fixed or regulated exchange rate structure, attributing it to the country’s inadequate expertise in effectively managing the intricate challenge of determining the naira’s equitable value without adversely impacting the economy.
“Our forecast is finely balanced, but we expect a return to heavier exchange-rate management in 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.
Meanwhile, Wale Edun,a distinguished finance expert, special adviser to the president on monetary policies, and trusted associate of President Bola Tinubu, expressed his Opinion about the Naira to dollar exchange during his ministerial screening.
He proposed that the authentic value of the currency should ideally be N700 per US dollar, in contrast to the prevailing parallel market rate of N820 at that particular time.
“It is difficult to predict because the capital markets take all the liquidity on their own. I want to say that the fundamental value of the naira should be somewhere around N700/$1,” Edun said.
