This is How Nigeria’s Currency Crisis Can Be Fixed

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NIGERIA'S central bank needs to addressthe supply side of the market
by allowing oil companies and banks to sell dollars to Bureau de
Change operators to ease pressure on the market, says President of the
Association of Bureau de Change Operators of Nigeria, Aminu Gwadabe.In
the last week, the naira has lost about15 per cent of its value in the
parallel market, sliding to N385 to the dollar; leaving investors
wondering what options can be explored by the central bank to halt the
free fall.Exploring options for Nigeria's central bank to halt
currency slideOver the last week, the naira has lost 15 per cent of
its value in the parallel market, sliding to N385 to the dollar on
Friday. The sharp decline reflects a growing shortage of US dollars to
fund imports and other needs in Africa's largest economy."What we are
experiencing now is beyond a simple forex (FX) distortion or spike in
exchange rate, what I see happening right now in the market is what I
term a currency crisis," said Gwadabe.He adds: "If you look at the
demand poolof the FX in the market, it clearly signifiesthe level of
unearned income in the economy – the solution is beyond rationing
strategy – whereby we are rationing the limited we have, we have seen
overtime has not provided immediate solution."The decline reflects a
growing shortage of US dollars to fund imports and other needs in
Africa's biggest economy as oilprices slump."It is a major challenge
and it's unfortunate that we're going through this right now, the
Naira has fallen in theblack market, so in the parallel market by
almost 40 per cent this month, I don'tthink that is sustainable," said
Tosin Osunkoya, Head Trading at Rand Merchant Bank.Osunkoya expects
the central bank to mirror Venezuela's actions where it made a
two-tier market, one."They now have the one market where you have some
items being sold in that market but they still had to devalue.""My
proposition will be, devalue the naira by maybe 25 per cent in that
market, then the second market will be allowed to free float – that
market you ally the FPIs and the FDIs (foreign portfolio investments
and foreign direct investments) to come into the market and meet
certain demand."

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Benue Blog Portal: This is How Nigeria’s Currency Crisis Can Be Fixed
This is How Nigeria’s Currency Crisis Can Be Fixed
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