The Central Bank of Nigeria (CBN) has attributed the fluctuations in the Naira's value to a combination of factors, including speculative activities and the impact of diaspora remittances. The latter refers to individuals sending money back to their home country from abroad, often utilizing the parallel market for currency exchange. This situation reached a critical point, resulting in the Naira plummeting to an unprecedented low of #955 on the parallel market, concluding the week at the same level.
Recent disclosures from the Central Bank's published financial statements have shed light on its financial commitments. The institution is reported to have outstanding debts of $500 million to Goldman Sachs and $7 billion in securities lending to JP Morgan. Additionally, there are liabilities of $6.3 billion related to foreign currency forwards.
The revelation of these financial obligations raises important questions about their potential influence on the foreign exchange market. Furthermore, it invites contemplation on the CBN's decision to allow the Naira to float freely, a move often referred to as "floating the Naira." This approach relinquishes direct control over the exchange rate and allows market forces to determine its value.
Considering these developments, it becomes paramount to assess the potential ramifications for the foreign exchange market and the broader Nigerian economy. Additionally, there is a need to critically evaluate the wisdom behind the CBN's decision to adopt a floating exchange rate system. Amidst these inquiries, discussions about potential remedies to address the Naira's volatility and the overall economic stability emerge as crucial points of consideration.
Host: Felicity Ezewuike
News Central's Perpetua Fasanmi-Peter reports
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Naira's Depreciation: Analysts Offer Remedies, Criticize CBN's Stance | Nigeria Tonight | 15-08-23
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