The value of naira to dollar in the black market/ forex Market closed at #470/$1 on the 10th of December from a starting price of #490/$1. The value of naira/dollar in the official market also sees naira gain a little value against the dollar as the price closed at #390/$1.
For a while now the value of the naira against the dollar continues to depreciate thereby affecting the economic conditions of Nigeria. The prices of commodities have become more expensive and even scarce. Process Tomatoes popularly called Sachet Tomatoes remains an essential item that has been very scarce in the market due to the high price placed on them.
Nigeria is known for importing almost all basic needs and this has further affected the lives of citizens. The over-reliance on importing has further made the dollar an essential currency against the usage of our naira to carry out a foreign transaction.
Due to the scarcity of the dollar in the official markets, the black markets have capitalized heavily by supplying dollars at a much higher rate than the official rate. This created disparity among the prices but also favored others.
KEY ADVERSE EFFECT OF THIS MACROECONOMIC PROBLEM
Nigerians now prefer to hold dollars as against their currency because naira value seems to depreciate daily
Unrest in the economy as the decrease in value of naira as against dollar has made necessary goods harder or expensive to acquire at the local market
Businessmen /women found this unfavorable as this will make them purchase lesser goods than they use to purchase and this further leads to an increase in the price of the goods.
In the long run, it will be hunger as food and other basic need will become even more scares to get.
WHAT'S THE WAY OUT
The ways out require a simple measure which must be adhered to strictly. The value of the naira against the dollar will not appreciate overnight but steady implementation of the said policy will help push this into realization.
Firstly, over-reliance on importation should be cut down, if possible, suspended. Foreign trade has always resulted in a deficient balance in Nigeria's balance of trade. It’s even worse if it continues for a longer time. Exports of a country should strive to be equal or above imports.
Cryptocurrency should be considered. This further places the value of the currency into the hands of demand or supply as against external regulation of one country's currency. Some countries have ventured into this and are reaping the rewards.
Flooding the entire Nigeria economy with the dollar. One major factor that resulted in the rise of the value of the dollar against the naira is the scarcity of the dollar in Nigeria. Making dollars readily available and making Naira scares will not only drive down dollar value against naira but also prevent the naira value from being more week.