Bloomberg reports that Nigeria's Finance Minister, Olawale Edun, announced that the fall in the naira was because of the overdue forward payments in the foreign exchange, which totaled $6.8 billion.
The Minister advised that until this issue of debt is looked upon, the naira will continue to experience more declines.
He further stated that if this issue is settled and all unpaid contracts are settled, then the naira will become stronger, making way for additional foreign exchange flows.
For months, the naira has been losing its value against the dollar, and on Thursday, it was reported that it was almost reaching its 1000/$ prediction by different economist analysts.
Although the reason for this surge in naira was because the Central Bank of Nigeria (CBN) has not provided adequate dollars in the market,
Edun partly stated,
The issue we have now is that the market is not liquid enough.
We are committed to encouraging liquidity based on reforms that have been made at the moment, on the fiscal side and the monetary side. And together with the restoration of trust and confidence, we think the FX flows will return.
The Central Bank of Nigeria (CBN) recently postponed a meeting where they are to deliberate on important issues on naira decline and stabilize the local currency because they are waiting for the confirmation of the new CBN Governor, Olayemi Cardoso, who worked at Citigroup.
However, the acting governor and four deputy governors have confirmed their resignations, which has halted important decisions from taking place.
The CBN has been less effective this year, which has slowed the distribution of dollars through the official channels. Now, the naira is now exchanging for the dollar, which was around 900 naira at the start of the month.
However, economists have predicted that the CBN will increase interest rates in their next meeting.
The commitment is to maintain the existing reforms and improve them. Improving the FX market further so the gap narrows
Looking at all options for boosting supply, the one-way bet of speculators that we are seeing at the moment is reversed.