…the Economic Impact of Tinubu’s Naira Floating
The recent floating of the Naira by President Tinubu’s administration has led to a significant shift in the exchange rate.
Previously, the Central Bank of Nigeria (CBN) intervened in the forex market to peg the exchange rate at a predetermined rate. However, this approach was unsustainable and led to reckless spending.
Unsustainable Exchange Rate Policies
– Under Goodluck Jonathan’s administration, $750m was spent monthly to maintain an exchange rate of N380/$1.
– Under Buhari’s administration, $1.6bn was spent monthly to maintain an exchange rate of N750/$1.
Consequences of Unsustainable Policies
These policies were financed through loans, including crude swaps and CBN’s Ways and Means Loans, which nearly led Nigeria to economic bankruptcy.
President Tinubu’s Reforms:
By ending subsidies on fuel and forex, President Tinubu’s administration aimed to salvage the situation and allow the Naira to find its true value. The new exchange rate reflects the market’s reality, and while it may be challenging, it’s a step towards economic stability.
