Of bans, foreign exchange earnings, and a strong naira, By Uddin Ifeanyi

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Plenty of dollars running after few naira, inflated the naira’s value. Nigeria was strong in the eyes of most patriots who beheld it.

There were other unintended effects, unfortunately. Arguably, the most significant effect of a “stronger” domestic currency was to drive imports up .Today, confronting evidence of the cackhandedness of our management of our foreign exchange resources until very recently, the question turns back to why a country in dire need of investment such as ours should keep such resources away. Two answers really.

We simply had multiple official markets where the naira’s exchange rate traded way below what obtained at the non-official market. All who argue this point concede that the possibility of those who got access to dollars at the official rate being able to resell their allotments or portions thereof at the unofficial markets was all shades of wrong. Indignation at this arbitrage opportunity ran the full gamut of possible responses.

Arguably, the most significant effect of a “stronger” domestic currency was to drive imports up . Worse, was that this “stronger” naira raised the cost of domestic inputs, especially labour, and as a result, of domestic output generally. Net effect? There were other unintended effects, unfortunately. Arguably, the most significant effect of a “stronger” domestic currency was to drive imports up . Worse, was that this “stronger” naira raised the cost of domestic inputs, especially labour, and as a result, of domestic output generally.

 

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