CBN Naira struggles and market gimmicks

The CBN acted during the week to shore up the Naira and probably tackle rising inflation which has risen to above the single digit target. One thing is clear: things are not looking good. The naira is desperately trying to shed some weight and inflation seems to be back to the fore. The CBN is doing all it can to keep things together and rightly so but we know it cannot do that for much longer. Something needs to change and soon. A certain subsidy perhaps.
They need to stop with the gimmicks though. Excluding participants from its WDAS only widens the gap between the CBN’s official rate and the true rate in the market, the one the one that really counts. Yes there is all the talk about round-tripping but that only exists because some participants who are willing and able to pay more are excluded from the auction. Thy cannot reduce round tripping by creating more incentives for round tripping. They are really just reducing their ability to influence the true exchange market.

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