Naira Crisis: FG Seeks Dollar Hoarders’ Cooperation to End Forex Crisis

The naira hit a record low of 1,310/$ on Tuesday, as the Federal Government struggles to bridge the dollar supply gap that is causing the currency’s free fall.

According to the PUNCH, the government is reaching out to individuals and institutions that are hoarding the dollar or have looted the treasury, urging them to bring their money into the mainstream market.

The government is willing to do whatever it takes to solve the problem, including granting amnesty to the dollar hoarders under two Executive Orders signed by President Bola Tinubu.

The orders are aimed at ensuring liquidity and stability in the forex market and sustaining the appreciation of the naira, which has been losing value against the dollar in recent weeks.

The content and implications of the orders are yet to be made public, as they are not gazetted.

However, Finance Minister and Coordinating Minister of the economy, Mr Wale Edun, explained at the 29th Nigeria Economic Summit in Abuja last week that the orders allow all the cash in the domestic economy to legally enter the formal money supply and also enable domestic issuance of foreign currency instruments.

A senior government official told the PUNCH that the details of the orders were kept secret to avoid unnecessary controversy that would distract the government from its goal of stabilising the naira.

The official said the government was talking to a large number of stakeholders who have billions of dollars in cash, assuring them that they can inject money into the economy and still withdraw it easily when they want.

The official added that the government’s approach was in the interest of Nigerians and that it would not hesitate to reach out to those who are perceived to be destroying the economy.

The official said, “If we truly want to revamp the economy and get Nigerians out of poverty through a practical means, we have to roll up our sleeves and interact with those who are destroying the economy at the highest levels. It is worth the sacrifice. It will require reaching out to corrupt people. What matters is that things get done. $100bn will be life-changing for the country.”

At the summit, President Tinubu addressed the concerns of the business community and assured them that his administration was working on improving foreign exchange liquidity.

He said his government would honour every legitimate contract regarding foreign exchange obligations.

He said, “My government is not blind to the challenges which several of you are facing in the financial markets. I can allay these concerns by revealing that we have a good line of sight into the additional foreign exchange liquidity that is required to restore market confidence.”

He assured investors that his government would uphold the sanctity of every legitimate contract in keeping with his commitment to enshrine fairness and the rule of law in Nigeria.

“Specifically, as it relates to the foreign exchange obligations of the government, all forward contracts that the government has entered into will be honoured and a framework has been put in place to ensure that these obligations are met in due course”.

Prior to its latest intervention, the Nigerian National Petroleum Company Limited in August disclosed that it had secured a $3bn crude repayment loan to support the naira and stabilise the foreign exchange market.

It said in a terse statement on its X account, “The NNPC Ltd. and AFREXIM Bank have jointly signed a commitment letter and Termsheet for an emergency $3bn crude oil repayment loan. The signing, which took place today at the bank’s headquarters in Cairo, Egypt, will provide some immediate disbursement that will enable the NNPC Ltd to support the Federal Government in its ongoing fiscal and monetary policy reforms aimed at stabilising the exchange rate market.”

But despite the initiative, the naira had maintained its steady fall in recent times, fuelling a spike in the prices of goods and services.

While the I&E window had been relatively stable at around N770 to 780/$, the parallel market, where most individuals and businesses get their forex from, traded at over N1,000.

On Monday, the naira exchanged at the parallel market for N1,190/$, while it hit a record low on Tuesday when it exchanged for N1,310/$.

On Wednesday, the naira appreciated a little when it exchanged for N1,300 in the parallel market. It maintained the rate on Thursday.

But on Friday, the naira recorded some gains as it appreciated to N1,250/$. On Friday, it sustained the appreciation, exchanging for N1,150/$.

The sudden appreciation of the naira was said to have plunged many speculators into losses. Some analysts had tied the gains made by the naira to the affirmation of Tinubu’s victory by the Supreme Court.

At the NES summit on Monday, the finance minister said Nigeria was expecting a forex inflow of $10bn in a few weeks, adding, “From the supply of foreign exchange through NNPCL, increased production, reduced expenditure from transactions such as forward sales, from our discussions with sovereign wealth funds, that are ready to invest and provide advanced alongside that investment, there is a line of sight of $10bn worth of foreign exchange in the relatively near future, in weeks rather than months.

Meanwhile, the Association of Bureaux De Change Operators of Nigeria says naira’s return to the path of growth is sustainable because, according to it, the recent devaluation experienced is not realistic.

The President, ABCON, Dr Aminu Gwadabe, in an interview with the PUNCH, said the fall recently experienced was due to loss of confidence in the local currency among other challenges.

He stated, “The rebound of the naira has shown that there is no empirical evidence to back up its recent mindless depreciation. The depreciation is out of speculation, currency substitution and loss of confidence.

“I therefore congratulate the authorities on their abilities to induce confidence in the market. It is also important to note that the naira is just trying to discover its place as it is difficult to control price mechanism by feat in a competitive and liberalised market, but the interplay of demand and supply in the market.

“I personally see the rebound trajectory to be sustained in the market despite the resistance of the speculators that are recording huge losses from the development as both the fiscal and monetary policies have continued to renew hope of huge liquidity injection from the proceeds of NLNG dividends and access to bilateral financial assistance.”

According to figures obtained from Aboki forex on Saturday, the naira was bought and sold for 1,140/$ and 1,150/$; It had earlier traded at 1,310/$ on Tuesday at the parallel market.

Newsflash Nigeria is an online newspaper that is developed and written exclusively for Nigerians. It’s packed with up-to-the-minute Local and National Economy News, Share & Capital Market, Health, Sports, Education, Technology, Business and Opinions.

To make further advert enquiries or place an order, please contact us at [email protected] and +2348053316946 and WhatsApp number 08033546732