John Campbell, a former United States Ambassador to Nigeria has explained why Nigeria is experiencing a shortage of Foreign Exchange as countries around the world grapple with the effects of the COVID-19 pandemic.
In a piece by Campbell published on the website of the Council on Foreign Relations, a US nonprofit think-tank, on Saturday, the diplomat said that Nigeria is experiencing a shortage of Foreign Exchange due to the fall in international oil prices.
According to Campbell, the dip in oil prices occasioned by the COVID-19 pandemic has had a negative effect on the Federal Government’s revenue and its access to US dollars through oil exports.
He wrote thus in the article; “Driven in part by the need for dollars, the government devalued the Nigerian currency, the naira, to 360 to the U.S. dollar, down from 306. That, apparently, was not enough. As of May 12, the naira is traded at 445 to the dollar on the street, and the one-year forward trading rate is 514 to the dollar, which means traders expect the exchange rate to fall even further.
“The Lagos stock exchange index is down about 12 percent since the start of the year. Because it is denominated in naira, and the naira has been devalued, the loss in value is even greater in terms of international currency. There are anecdotes (impossible to quantify) that rich Nigerians are getting out of the market and doing what they can to shelter their assets abroad—an old song in times of instability, whether economic or political,” Campbell concluded.