The Persistent Depreciation Of Naira (causes And Posible Solution)

CHAPTER ONE

INTRODUCTION

During the pre – Babangida administration years, the Nigerian currency was above the dollar and at par with the pound, but now, the naira seems to be tumbling down the abyss. Exchanging for #44 to the United States dollar and #120 to the pound sterling in the parallel market as at October 1994 and despite the official rate for the pound sterling at 336 to one dollar and #68 to one pound in the official market. The question is how did we get to this present stage? What happened between 1995 and now?

 When General Ibrahim Babangida mounted the seat, naira was overvalued, especially as receipts from crude – oil – Nigerian main foreign exchange earner had been decline over the years. So some thing was to be done about the naira. Government manufacturers and other commentators came into a consensus that the naira exchange rate should be more realistic.

 On the other hand, advocates of devaluation had a relief on 26th September, 1986 when government introduced the second tier foreign exchange market (SFEM) in line with the objective of SAP. As explained by victor odozi, the CBN director of foreign currency operations “the move was to enable education I the pressure on balance of payment”.

 .1            BACKGROUND OF THE STUDY

Naira has lost its value? Cried a house wife who went to the market with some boundless of naira and came home with few items in her basket and had no balance from the money she went to market with.

          Today, nobody wants to use naira as medium of exchange, no body wants to counts his wealth in naira.

 Some ministers in the federal capital territory receive their salaries I dollars. In same vein, many Nigerian, if given the opportunity wouldn’t want to be paid with naira yet there is this obligation to every Nigerian to serve and love his father’s land. Even some of the so – called fathers have no respect for the land. Now the fact is that their children will come up tomorrow and would want to be paid with dollar. Naira, which is their father’s land currency keep going down.