Nigerian inflation rate has risen to 24.8%, the highest in years. With the naira now falling at will against the dollar, an associate professor of economics says the desire for foreign goods by Nigerians is responsible for the fall of the naira. Associate Professor Peter Meade in an interview with our reporters said Nigerians must begin to reduce their yearnings for foreign exchange goods to help the naira bounce back. He said patronage of foreign exchange is another influencing factor.
Associate Professor Peter Meade further explained that in a situation where there is excessive importation or dependent on imported commodities in one country, more of the country’s currency will be taken to the foreign exchange market to exchange it for the currency of their trading partner. He also said that in Nigeria, we are always in the form of excessive demand for foreign goods, which means that, every time we over-flood the foreign exchange market with the naira, the supply of naira will be excessive in that market, and in that case, the price of the naira in terms of currency will fall, meaning that the exchange rate of the naira will continue to increase.
Associate Professor Peter Maede said bureaucracy in sourcing for foreign exchange in the official market and mono economy also affects the naira. He said an economy that is a mono-economy such as Nigeria’s economy, where the economy over depends on only oil as a source of foreign exchange. He said the more we export the oil, we use the currency that we secure from the export to now import more products, which means that domestic refining of our crude oil is not happening in Nigeria. In that case, we use the money we get in exporting our crude to import finished products, meaning that importation is more.
The lecturer of economics at the University of Port Harcourt said the only way out of the naira issues is for the Federal Government to increase local production in the country. He explained that if we increase productivity in our country, then we will be able to produce most of the commodities we are importing now.
Still, on the economy, a professor of finance Tamunonimim Ngerebo told our reporters that the data released by the National Bureau of Statistics calls for wise spending by Nigerians. He said poor Nigerians will be the most vulnerable with the latest inflation rate. He asked Nigerians to brace up for more hard times and also advised Nigerians to make some adjustments in their spending.
