BALANCE OF PAYMENT OF TRADE BALANCE IN NIGERIA

BALANCE OF PAYMENT OF TRADE BALANCE

1. OUTLINE OF THE PAPER BALANCE OF PAYMENT OF TRADE BALANCE FOREIGN DIRECT INVESTMENT/ FOREIGN PORTIFOLIO INVESTMENT PUBLIC PRIVATE PARTNERSHIP MACROECONOMIC POLICY DIGITAL ECONOMY INTEGRATION CONCLUSION

2. INTRODUCTION The Nigerian currency has gone from the world’s worst performing in February, 2024 to being the best performing currency in April, 2024 after it appreciated by 14% in March and by 12% in April, 2024 in terms of her value or purchasing powers. These rallies are reversing the two devaluations by the government in a bid to unify the different foreign exchange markets.

3. CAUSES OF DEPRECIATION OF NAIRA: What caused the depreciation of the Naira in 2023 and the first months of 2024 was because the President Tinubu’s administration had embarked on two policies, though noble but the way they went about them has brought untold hardships on Nigerians.

4. CAUSES CONT’D One is unification of the FX markets; official and parallel alike; and the introduction of the price discovery mechanism. This unification of the markets came with two occasions of devaluation by the Monetary authorities in June, 2023 and earlier in the year, 2024 totally 68% devaluation in total.

5. CAUSES CONT’D The second one being the “subsidy removal”, which in reality has not been removed but prices have only been hiked in a bid to do so but to no avail.

6. WHAT HAPPENED AFTER DEVALUATION/ DEPRECIATION? After the “bloodbath” that followed the two devaluations as well as the depreciation by market forces all in less than a year; the local currency in Nigeria, the Naira, has been gaining momentum in recent times; starting in March, 2024. It has gone from the world’s worst performing currency to the best within in a matter of weeks!

7. CERTAIN REMEDIES FROM CBN This is so, because the CBN has rolled up its sleeves. Some of the aggressive policies to tackle the Nigeria’s FX problems include an unprecedented hiking of anchor interest rate by a whopping 400 basis points in February and following hot on the heels of that within a month, by March, is yet another aggressive increase by 200 basis points; albeit this not as much as the one that came few weeks earlier. The hiking of interest rates helped attract FPI (Foreign Portfolio Investments) through Treasure Bills as well as OMO Bills which made it possible for FX inflows much more than what was obtainable before the hikes.

8. REMEDIES CONT’D Secondly, all verified foreign exchange forwards backlog have been cleared boosting investor confidence!