Stability now restored to foreign exchange market – Onanuga

The special adviser to the President on Information and Strategy, Bayo Onanuga, says after months of foreign exchange storms, stability has now been restored to the forex market. 

Onanuga made this disclosure in a statement in response to a report published in the New York Times criticising the Nigerian economy as facing the worst trajectory in a generation.

According to him, the fact that the rate now trades below N1500/$ is an indication that the forex market is no longer unstable.  

He also mentioned that there are various projections that the exchange rate may regain its value back to N1,200/$ or N1,000/$ before the end of the year.

“President Tinubu had to deal with the cancer of public finance on the first day by rolling back the subsidy regime and the generosity that spread to neighbouring countries. Then, his administration floated the naira. 

“After some months of the storm, with the naira sliding as low as N1,900 to the US dollar, some stability is being restored, though there remain some challenges. 

“The exchange rate is now below N1500 to the dollar, and there are prospects that the naira could regain its muscle and appreciate to between N1000 and N1200 before the end of the year,” Onanuga added.

According to him, before the advent of Tinubu’s administration, Nigeria was spending a whooping sum of $1.5 billion monthly to peg foreign exchange before Tinubu’s unification policy in June 2023.  

“Like oil, the exchange rate was also being subsidized by the government, with an estimated $1.5 billion spent monthly by the CBN to ‘defend’ the currency against the unquenchable demand for the dollar by the country’s import-dependent economy. 

“What was more, the country was failing to fulfil its remittance obligations to airlines and other foreign businesses, such that FDIs and investment in the oil sector dried up, and Emirate Airlines cut off the Nigerian route,” Onanuga said. 

Price action shows that naira bulls have been able to keep the naira within the N1500/$ borderline as an uptick in the CBN’s forex reserves moderated concerns in the country’s forex market.

These positive trends in the past few weeks show a deviation from the instability of the currency that overwhelmed the forex market, pushing the naira against the greenback as low as N1900/$ as of February 2024. 

Meanwhile, the Cardoso-led CBN repeatedly said the goal is to maintain exchange rate stability while upholding a transparent, willing buyer, willing seller market system.