Will The Naira Stop Crashing Against the Dollar? EduBridge-admin 20 January 2021

Will The Naira Stop Crashing Against the Dollar?

naira-crash

I’m sure we’re all wondering why the Naira is falling to new lows despite campaign promises and initiatives.

When would it come to an end?

What is the answer?

There are several remedies to this problem, but the most prevalent is to ensure that there is an appropriate supply of Dollars entering the economy through exports.

According to the Daily Mail, Nigeria expects $10 billion in foreign currency inflows in the coming weeks to alleviate liquidity in a foreign exchange market that has stifled growth in Africa’s largest economy.

Furthermore, the finance minister, Wale Edun continued to double down on raising USD liquidity from state oil firm crude sales and foreign investment firms to invest in Nigeria.

However, this does not address the problem. It’s just another hazy attempt to soothe nerves. Nigeria’s government has stuck to the same tired rhetoric that has never worked.

What solves it? Not rocket science i might add.
In simple terms — Diversification.

Advantages?
One of the primary advantages of a diverse economy is that it is not rigid. The economic health of a town is not dependent on a particular industry or market sector. This means that if the price of oil falls or the price of grain falls, the region’s economy will be protected from the abrupt economic conditions affecting these industries. This protects other industries’ economic sustainability and prevents mass layoffs and severe drops in property values. Over time, communities can absorb the impact and continue to move forward.

Another advantage of a diverse economy is increased innovation. enterprises not only merge for financial advantage, but they also merge to produce new enterprises.

Over-reliance on a single industry has never worked.

In conclusion, over-reliance on oil exports as the single largest source of foreign exchange for the country is a high-risk, low-reward investment. Spreading your exports over various portfolios to mitigate potential risks is highly recommended. This allows you to receive anything from somewhere if the other end does not offer you with anything or does not provide it in the manner intended.

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