Boma Achenimie 
There are strong indication that if President Bola Tinubu and the Central Bank of Nigeria(CBN) do not act quickly and pragmatically it may end up losing control of the Nigeria currency and the economy.
While the government appeared distracted with the coup in the Niger Republic, the Naira plunged further in the foreign exchange markets last week, reaching a record high of N955 to US$1 on Thursday.
The naira’s decline to the south has quickened since Tinubu forced the CBN to combine the exchange rates two months ago. It has been difficult to achieve the twin objectives of promoting a “realistic” rate and closing the substantial arbitrage gap between official rates and informal market rates. The disparity, and therefore the potential for illicit arbitrage, widened from N100/$ to N200/$ at the official exchange rate of N767.76/$.
The naira is on track to surpass the N1,000/$ mark and beyond soon, fueling legitimate concerns that the CBN may lose control with serious repercussions in the absence of an economic management team, direction, or cabinet, as well as any accompanying regulatory agency reforms.
All of these factors are also colliding with high inflation and business contraction. In a statement last week, the IMF added to the worry, claiming that the “loose fiscal and monetary policies” in place made it difficult for the naira to stabilise.
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Indicating N700/$ as the realistic rate, Wale Edun, Tinubu’s longtime economic advisor and nominee for a ministerial position, claimed that higher rates are not supported by the economy’s fundamentals.
The prediction of a N1,000/$ rate through 2027 made by the Economist Intelligence Unit now seems unduly optimistic. Prior to then, things may become really unpleasant.
This is not shocking at all. Due to the poor non-oil export revenues, supply is limited. The artificial demand is fueled by hoarders and speculators as well as vast, unrestrained money laundering by state and non-state entities.
Politicians, people in public office, bandits, kidnappers, and linked contractors are driving the market with ill-gotten naira, not manufacturers or legitimate businesses, thanks to loose regulation of deposit money banks and bureaux de change.
Instead of making impulsive, poorly thought-out, and uncoordinated judgements, Tinubu has to adopt deliberate, well-thought-out economic strategies. In addition to an EMT, he urgently needs more economists and technocrats than the ragtag group of politicians he has named as ministers.
The CBN should support the FX market for a few weeks in order to maintain control over the naira and prevent hyperinflation. After that, it should stop BDCs and errant banks from engaging in unlawful round-tripping and arbitrage.
For the purpose of monitoring operators and rapidly and forcefully punishing infractions and offenders, there should be stronger cooperation with other regulatory agencies, the anti-corruption agency, and law enforcement agencies.
Strong stimulus is required for an economy that is struggling with high unemployment, inflation, production contraction, and declining public revenues.
These ought to concentrate on safeguarding vital industries including agriculture, medicine, transportation, and small enterprises. Small and medium-sized enterprises (SMEs) need special consideration, including how to subsidise their access to low-interest loans and remove burdensome taxes and levies.
Future decisions will be difficult, but they should only be made following thorough preparation and diagnosis. The goal of closing the gap between the official Importers and Exporters window and the parallel market pricing is being effectively undermined by the shortage of dollars, which is leaving supplies to the market in the hands of black-market operators. To stop the naira’s downward trend, a brief strengthening of the market that supports legal firms is preferred in order to protect the currency for a very short time.
To prevent an economic catastrophe, the economy needs to be closely monitored and well planned for; moving forward, Tinubu should refrain from making snap decisions without them.
