Understanding CBN’s Share of Foreign Currency Exchange (Pulse Contributor Review)

Basically, it should be noted that exchanges between currencies are divided between demand and supply, and only a balance between supply and demand of foreign currencies can establish the stability of the exchange rate. With the understanding of this concept, suffice it to say that the majority of the measures taken by the CBN are mainly measures that impact the demand for foreign currencies. Looking at the different approaches to CBN which involves the most important, which introduces E-naira, as well as cryptocurrency restrictions. All of this tends to meet growing demands for foreign currency, while trying to maintain the efficiency of the naira. In all of these, little or no attention is paid to bringing foreign currency into the country, and this is also an important aspect of currency exchange that could determine the effectiveness of current CBN policies. Therefore, it is not surprising that with all the measures taken by the CBN, the naira is still experiencing a further level of depreciation. Apparently, in order to increase the supply of foreign currency, the following must be achieved; agricultural transition from the export of primary products to the export of secondary products to increase the yield of export sales, increase interest rates to attract foreign investors, and also ensure better ease of doing business which can create more jobs leading to increased production capacity at the same time limitation of time depends on imported goods for which Nigeria has a comparative advantage.

In conclusion, this shows that the supply side of the currency has a lot to play in establishing stability and this economic factor should be given more credit based on the demand side.