Business Why CBN Intervention May Worsen Naira Against Dollar – Prof. Ukpong



The Naira will get worse if Nigeria’s External Reserves are depleted, a Professor of Financial Economics at the University of Uyo, Awka Ibom State, Leo Ukpong, has stated.

Ukpong, said forex exchange should be channelled towards economic activities that create values in the domestic economy.

He warned that subsidising the naira for holiday travels, religious trips, payment of foreign school fees, outward medical tourism, purchase of imported refined petroleum products, and importation of machine parts, would not help the naira to sustain its appreciation.

“Obviously, if the nation’s dollar reserve is reduced to a critically low level, the Naira will certainly take a beating in the market. In other words, naira will come under strong pressure to depreciate".


Recall that over weeks ago, CBN has successfully raised the value of Naira from approximately N510/$ to N390/$ (between February 22, 2017 and April 3,2017), an approximately 24.27 per cent appreciation of the Naira against the US dollars.

The Prof, however, said the implication of such direct intervention by CBN on the foreign exchange market is increased supply of US dollars (appreciation of the naira) in the short term.

He explained that the sustainability of this exercise depended on the rate of forex inflows and outflows.