Economists have outlined several strategies to counter the depreciation of the Nigerian naira and address the scarcity of US dollars.

One key recommendation is to secure balance of payment facilities from multilateral institutions, which could inject foreign currency into the economy. Another crucial step is to enhance the export of goods and services to increase dollar inflow.

The naira has faced a significant decline, losing approximately 25.65% and 65.65% of its value against the dollar within two months in both the parallel market and the official market, respectively.

The liberalization of the foreign exchange market has contributed to this decline.

Key factor in naira depreciation

One of the major contributors to the naira’s depreciation is the heightened demand for dollars amidst a shortage of supply. This has prompted experts to emphasize the importance of addressing supply-demand imbalances to stabilize the exchange rate.

Yemi Kale, a chief economist, suggested that stabilizing the exchange rate hinges on meeting the demand for foreign exchange, which may require intervention from the Central Bank of Nigeria (CBN).

The CBN’s official reserves have also experienced a decline, limiting its capacity for foreign exchange market interventions.

To boost dollar supply, experts recommend increasing exports, attracting foreign investments, and securing balance of payment facilities from entities like the World Bank.

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Analysts also underline the need for the government to support domestic manufacturers to enhance the quality and quantity of locally produced goods, thereby stimulating local demand and reducing dependence on imports.

Furthermore, collaboration among stakeholders, regulatory reforms, and fostering an enabling environment are essential to increasing dollar supply and stabilizing the naira.

The Association of Bureau De Change Operators of Nigeria (ABCON) suggests involving Bureau De Change (BDC) operators in harmonized markets and implementing stricter measures on crypto platforms to enhance financial stability.