The alarming exchange rate has been described as a major challenge affecting the Nigerian economy which has caused untold hardship for Nigerians.
A trade analyst, Mr. My-Ace China, who spoke on the shrinking economy of the country, noted that Nigerians are now frequenting foreign currencies and goods, thus neglecting the impact on the economy of the country.
He also identified insecurity and epileptic power generation across the country as contributing a high percentage to the cause of inflation in the country, which has threatened the country’s economy.
China, who is a Port Harcourt-based property tycoon, spoke to THISDAY in Port Harcourt, capital of Rivers State, yesterday.
He said that in a country based on exports, the local currency is always strong because people produce what they consume, regretting that in Nigeria, the products consumed are 95% imported, which has seriously affected the naira.
According to him, “In 2022, we reached 20.35%. This is huge because of the type of inflation we have in Nigeria.
“The effect is that because not all inflation is negative, we’re talking about Nigeria. It’s worrying in Nigeria because we don’t have demand-pull inflation in the country. What we have is cost push and build-in inflations, the two worst.
“Insecurity is on the rise. When people are no longer motivated and safe to travel to the places of production, the rate of production will drop. This is the case with agro-products (food). Food comes This is where security is critical to the survival of Nigerians, as more and more farmers abandon their farms, driving up commodity prices.
“In an export-based country, the local currency is always strong because you produce what you consume. But in Nigeria, which is 95% import-based, the naira has gone down a lot due to insecurity and bad leadership. What causes the exchange rate is no longer the gold reserve.
“Before, what caused the exchange rate was the gold reserve, but now that money is paper money, what causes the exchange rate is the level of confidence in the economy. If the world community has confidence in your economy, the demand for your local currency will be high and the exchange rate of that currency will appreciate.”
China observed: “Now, due to insecurity and failed leadership, the demand for naira is very low. Even our own people do not want to use naira, especially during presidential primaries when they transacted in dollars. It was over. the world we lost faith in our naira.
“Despite the war, Russian rubble is one of the highest currencies in the world, not because Russia has no challenges, but the government has put a deliberate policy that if you have to do business in Russia, it must be rubble. So all the companies are asking for the rubble; the oil is sold in rubble. The demand makes it high rubble even in times of war.
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