The Nigeria’s Naira is now in what appears an unstoppable free fall. It exchanges for N1,100 to the US $ yesterday on the streets. It was about N750 to the US $ before the reforms and devaluation 14th of June 2023. The plan after the aggregation of all exchange rate windows was to end the corrupt rationing by the Central Bank of Nigeria and encourage an inflow of portfolio and direct investment. Instead, the dynamics since has led to widespread speculative holding of the US dollar and increasing dollarization in the Nigerian economy. Inflation reached a near 20 year high of 27% in September. The government’s direction towards economic orthodoxy is not the problem. The challenge is the folly assumption that the markets will immediately fix the demand and supply imbalance.
