Why Naira Crashed- Wale Edun

By Mohammed Bello Doka

Abuja - In a bid to stabilize the Nigerian naira, Finance Minister Adebayo Olawale Edun has identified an astonishing $6.8 billion overdue forward payment as the primary culprit responsible for the currency's declining value. Addressing this issue, he insists, is crucial for bolstering the local currency and restoring its worth.

Edun emphasized that resolving these unpaid contracts would not only fortify the naira's value but also pave the way for additional foreign exchange inflow. Over the past few months, the Nigerian naira has experienced a consistent decline in its value, nearly reaching the threshold of 1000 naira per US dollar in the parallel currency exchange market.

This depreciation can be attributed to the central bank's inadequate supply of dollars to this particular market. Acknowledging the liquidity challenges, Edun stated, "The issue we have now is that the market is not liquid enough. We are committed to encouraging liquidity through fiscal and monetary reforms. With restored trust and confidence, we anticipate the return of foreign exchange flows."

While economists project that the central bank may raise interest rates to address this situation, the timing remains uncertain due to the postponement of their next meeting with no rescheduled date announced yet. In response to the delay and speculation surrounding it, Finance Minister Wale Edun reassured the public that the situation will inevitably reverse once there is an increase in the supply of dollars into the market.

Edun remarked, "Our commitment is to maintain and enhance existing reforms. By further improving the FX market and narrowing the gap, we aim to explore all options for boosting supply, ultimately reversing the speculators' one-way bet that currently prevails.

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