Thursday, February 15, 2024
💵 1 USD ⇛ ₦1,590
💷 1 GBP ⇛ ₦2,010
💶 1 EUR ⇛ ₦1,714
💶 1 CAD ⇛ ₦1,156
1. Today, we’ve surpassed the threshold of 1500 naira to 1 dollar and 2000 naira to 1 pound in black market rates.
2. For those unfamiliar with the intricacies of exchange rates, here’s a straightforward explanation:
3. Nigeria heavily relies on imports for nearly all aspects of daily life, including raw materials for local manufacturing. Even products made in Nigeria, such as machinery parts, flour for bread, and even toothpicks, often involve imported raw materials.
4. The primary Nigerian exports are crude oil and Liquified Natural Gas, with transactions predominantly conducted in US dollars.
5. Due to a significant trade imbalance, where the value of imports surpasses that of exports, there’s a shortage of dollars to meet our import demands.
6. Consequently, more individuals are exchanging their naira for the limited available dollars to sustain their businesses.
7. This situation reflects the basic economic principle of supply and demand – increased demand for a commodity leads to higher prices. Hence, we now require more naira to purchase dollars due to the heightened demand for the dollar.
8. The removal of subsidies was intended to alleviate this issue by directing the previously subsidized fuel dollars into our foreign reserves. However, currently, these funds are being misappropriated, leaving the foreign reserves depleted.
9. Additionally, a significant challenge arises from the pledging of a substantial portion of our crude oil, intended for generating foreign exchange (forex), as collateral for sizable loans acquired by the Nigerian government. Consequently, the expected income from this source is insufficient for the foreseeable future.
10. Financial experts are predicting a gloomy outlook, forecasting that the US dollar to Naira exchange rate will not improve and may worsen.
11. Concerns arise as this economic situation poses a threat to the overall well-being. The increasing hardship may render basic necessities unaffordable for the middle class and low-income earners. Elevated food prices are pushing essential items out of reach for many, impacting nutrition and potentially causing health issues, especially among children. Urgent measures are required to address this critical situation.
