How Nigeria can stem naira fall

Nigeria continues to face challenges in its foreign exchange market, with the naira depreciating against the U.S. dollar. Trading at about 1,100 naira to the greenback at the parallel market, the naira hit an all-time low of 999 naira to the dollar at the Nigerian Autonomous Foreign Exchange Market. Emmanuel Odiaka, CEO of ECOB Capital, shared insights on the current trends affecting the FX market during a recent CNBC Africa interview. Odiaka highlighted the confidence crisis prevailing in both fiscal and monetary authorities' policies and emphasized the critical need for increased liquidity in the market to address the ongoing challenges. Discussing recent developments in the FX market, Odiaka pointed out the supply issues contributing to the naira's decline. He highlighted the importance of immediate actions by the Central Bank of Nigeria (CBN) and collaboration with fiscal authorities to inject liquidity into the market. Odiaka also mentioned ongoing talks with multilateral organizations like the World Bank and potential financial support to address the liquidity crunch. Addressing concerns around price discovery and the true value of the naira, Odiaka expressed difficulty in gauging the currency's actual worth amidst market uncertainties. He emphasized the market's need for liquidity injections to stabilize the naira and urged for enhanced transparency and liberalization in the FX market. With a significant backlog of forward transactions, estimated between $6 to $10 billion, Odiaka underscored the urgent need for strategic interventions to mitigate the currency crisis. Furthermore, Odiaka emphasized the need to boost exports and reduce the country's import bill, pointing out challenges in oil production and security issues affecting output levels. He called for a more transparent approach from fiscal authorities, advocating for responsible fiscal practices and possible asset sales to raise immediate liquidity. Odiaka also highlighted the importance of enhancing security measures to safeguard oil production and attract investments in the sector. In conclusion, while acknowledging the tough road ahead for Nigeria's FX market, Odiaka stressed the imperative for coordinated efforts between monetary, fiscal authorities, and multilateral partners to navigate the current challenges. With a focus on liquidity injections, enhanced transparency, and strategic policy interventions, Nigeria aims to stabilize the naira and restore market confidence amid ongoing economic uncertainties.