President Bola Tinubu’s economic reforms have struggled to yield results, even five months after his inauguration. The devaluation of the naira in June failed to bring order to a complex exchange rate system with multiple tiers. What’s more, the national currency continued to plummet on the parallel exchange market, surpassing the thousand-naira mark for one US dollar.
For years, the Central Bank of Nigeria (CBN) heavily intervened to maintain the local currency at an exchange rate hovering around 400 nairas for 1 dollar. In theory, this controversial monetary policy aimed to promote local production by offering competitive dollar rates to local manufacturers while significantly restricting access to foreign currencies.
However, this system was swiftly abused, with well-connected individuals acquiring cheap dollars from the Central Bank and then reselling them on the black market.
Upon assuming power, Bola Tinubu embarked on a mission to reform this system. In the heart of June, the CBN implemented adjustments that resulted in the depreciation of the Naira. The objective was to align with the realities of supply and demand dynamics in the official market.