Ways CBN Can Achieve N1000 Per Dollar Exchange Rate, According To A Financial Expert

Ways CBN Can Achieve N1000 Per Dollar Exchange Rate, According To A Financial Expert

Kalu Aja, a financial expert, has proposed a strategy for the Central Bank of Nigeria (CBN) to stabilize the exchange rate at N1000 per USD……READ ALSO Hilda Baci’s Joy Empowering Women Towards Financial Independence

Aja made this suggestion via a statement on his official X handle on Sunday.

This recommendation comes amidst appeals from the Association of Bureaux de Change Operators for the apex bank to lower the allocation rate of the Dollar.

Despite the recent appreciation of the Naira against the dollar, with the exchange rate reaching N1,251 per dollar on Friday, Aja emphasizes that the underlying economic fundamentals remain unchanged, with 89% of forex earnings still derived from oil.

“It’s not magic. Sell dollars at N1000, and market prices will crash to N1000,” Aja asserted, highlighting the conventional intervention strategy adopted by central banks worldwide to regulate floating markets.

He further elaborated, stating, “The issue, as I have pointed out, is the Cost of the defense, not the defense. CBN has issued Bonds (FPI) and is using those bond proceeds to ‘defend’ the Naira exchange value.”

Aja emphasized that the real economic fundamentals remain unaffected, with oil revenues still comprising the majority of forex earnings. However, he suggested that the CBN’s current approach buys time for the executive to increase oil production, potentially altering the forex landscape.

In conclusion, Aja emphasized that a change in oil output would fundamentally alter the forex dynamics, potentially alleviating pressure on the dollar and leading to a new equilibrium.