This year, the naira has fallen by about 32% at the black market to ₦740 against the greenback. At the official rate, a.k.a Nigerian Autonomous Foreign Exchange or NAFEX, the naira has dropped by 5% to ₦446/$1.
Foreign exchange (fx) scarcity and the Central Bank of Nigeria’s (CBN) capital control measures have contributed to this decline.
Key takeaways:
-
Monetary and fiscal policy authorities can work together to achieve low inflation and a stable exchange rate. However, monetary policy must be independent of fiscal policy.
-
The impact of a capricious CBN (monetary policy authority) is evidenced in Nigeria’s persistently high inflation and naira volatility.
-
PDP and APC agree in their manifestos that there’s a need to deal with inflation and naira stability. However, neither plan proffers worthy solutions.
Despite this wide gap in rates and multiple markets—Nigeria has up to four exchange rate markets—political influence has deterred the CBN from unifying
