Quote from Alex bobby on February 5, 2024, 7:37 AM

A Swift Transformation: CBN Alters Naira to Dollar Exchange Rate in Just 24 Hours, Expert Reacts

Introduction: In a surprising turn of events, the Central Bank of Nigeria (CBN) has made a swift adjustment to the official Naira to Dollar exchange rate, catching many off guard. In a move that has left the financial community buzzing with speculation, the CBN's decision is already sparking reactions from experts and analysts.

The 24-Hour Exchange Rate Overhaul: Within the span of just 24 hours, the CBN has altered the official exchange rate of the Naira to the Dollar. This sudden adjustment has left businesses, investors, and the general public grappling to understand the implications of such a rapid change in the economic landscape.

The New Rate and its Ramifications: The new exchange rate, which now stands at [insert new rate], has left many questioning the motives behind the CBN's decision. As businesses and individuals scramble to adapt to this unexpected shift, the broader economic consequences remain to be seen.

Expert Insights and Reactions: Financial experts and analysts are quick to provide their perspectives on the CBN's move. Some believe that the sudden adjustment is a strategic response to economic challenges, aiming to boost exports and attract foreign investment. Others express concerns about potential inflationary pressures and the impact on the purchasing power of the Nigerian populace.

In an exclusive interview, [insert expert's name], a renowned economist, shared insights on the situation. According to [insert expert's name], "This rapid change in the official exchange rate is unprecedented and will undoubtedly have ripple effects throughout the economy. While it may stimulate certain sectors, there are inherent risks, especially regarding inflation and investor confidence. Monitoring how the market responds in the coming weeks will be crucial in understanding the full extent of these changes."

Market Reactions and Speculations: As news of the altered exchange rate spreads, financial markets are experiencing fluctuations, and investors are reevaluating their positions. Speculations about the CBN's long-term strategy and the impact on Nigeria's economic stability are rife, with stakeholders anxiously awaiting further clarification from the central bank.

Adapting to the New Norm: Businesses and individuals are now faced with the challenge of adapting to the new exchange rate. Importers and exporters, in particular, must quickly recalibrate their pricing strategies and financial forecasts to navigate this unexpected shift.

Conclusion: The CBN's decision to change the official Naira to Dollar exchange rate in just 24 hours has sent shockwaves through the financial landscape. As experts and analysts continue to dissect the implications, the broader Nigerian community braces itself for the potential economic changes that may follow. Only time will tell how this swift transformation will shape the nation's economic trajectory in the months to come

This, he said, will bring an immediate, noticeable increment in supply of foreign exchange in the market.

In his words: “What the banks have been doing then is to hoard the foreign currencies (FX), kind of betting or let’s say speculations. So this reduction will have the effect of increasing supply, there will be an immediate, noticeable increment in supply of foreign exchange in the market.”

Meanwhile, data from FMDQ on Wednesday showed that the Naira marginally appreciated N1,455.59 per US dollar from N1,482.57 on Tuesday.

On a day-to-day level, the Naira appreciated by N26.98 gain or a 1.85 per cent increase, to close at N1,455.59 from N1,482.57 per Dollar on Tuesday. But the black market remained unchanged at N1,470 per US Dollar at the close of Wednesday.

Flip to Thursday, the naira- exchanged between N1,300 and N1,350/$ as against over N1400/$ it exchanges the previous day.

However, with Naira ending at N1,455.59 per US dollar, the nation’s currency recorded a 37.6 per cent depreciation in January 2024.

This comes as the Association of Bureau De Change operators said it will close its offices for business on Thursday over dollar scarcity.

Wunmi said, “In the short term the price of dollars is going to crash, but in the long term, whether or not it is going to work will depend on the ability of the CBN to ensure compliance, so the CBN would have to look at the issue of effective enforcement.  This is not a question of treating violations of this policy as mere infractions. It should be more than that, it should be treated as economic sabotage

He however said, “that, the success of the  CBN’s policies will  to  be will determined by its strong enforcement, because some unscrupulous banks are going to do a lot of disguised compliance, because a lot of the banks are already trading in the misfortune of the Naira,

“If the CBN can enforce not just through payment of fines, but if  heavy penalties are imposed, compliance is effectively monitored and non-compliance is punished.  I think  it will have  significant effects on the value of the Naira.

Recall that the Central Bank of Nigeria, on Wednesday through a circular titled:  “Harmonisation of Reporting Requirements on Foreign Currency Exposures of Banks”, ordered Deposit Money Banks to sell their excess dollar stock latest February 1, 2024.

The CBN, which in the circular also warned lenders against hoarding excess foreign currencies for profit. According to officials, the central bank believes some commercial banks hold long-term foreign exchange positions to enable them to profit from the volatile movements of exchange rates.

The new circular introduces a set of guidelines aimed at reducing the risks associated with these practices.