Pump and dump on naira

As a Nigerian, life has been tough lately due to the removal of subsidy. This has led to an increase in transportation costs, as well as rising prices of goods due to the floating Naira in the Forex Market. Even local goods that are supposed to be affordable have become expensive. As a result, my monthly budget has become a challenge to manage. The cost of living keeps going up, including clothing prices. It's becoming increasingly difficult for people like me to cope with the current situation.

I have a friend whose transportation takes half of his salary but for me, It is food because I don't buy food outside, I cook myself, and cooking at home can be expensive, especially when you want to go for the right food and not food that will destroy your gut. These days, food is costly, and the cooking gas that used to be minimal before is now very expensive too, which makes my monthly budget difficult to maintain because I have to cut some things away. However, everything is getting more expensive because $1 to naira was 1200, but something happened yesterday, which was crazy and supposed to be good news, but it just shows how corrupt and how bad the country is going.

The crazy

When I woke up this morning, I was shocked to see how fast the prices had dropped. I immediately went to check the market and found that $1.00 was now only worth 1000 naira, down from its previous value of 1200. After doing some research online and in newspapers, I discovered that Nigerian banks had received a billion dollars from the government, which they used to clear part of their 7 billion dollar debt. The government's next plan is to pump close to 10 billion dollars into the foreign exchange market to stabilize the price. It's clear that the naira is facing some serious challenges at the moment.

This is supposed to be good news, especially for Nigerians, as the Naira will be stabilized for the main time. However, it should be noted that Nigeria currently has no money in reserve, leading to questions about where the funding for this stabilization came from. When asked, the CBN gave a sketchy response, stating that the public should focus on the stability of the Naira rather than transparency. This lack of transparency is not surprising, given the deep-rooted corruption in both the CBN and Nigeria as a whole. It is evident that this is just bad news and nothing more.

Pump and dump game

This CBN cheek trick provides temporary relief from the rising inflation in Nigeria, but it is not a long-term solution. The government is trying to calm the people and investors by injecting more money into the fx market, but they are not addressing the root cause of the problem, the need to generate more income for Nigeria. The current approach is only a temporary solution, and it does not solve the underlying issue. The just a pump-and-dump mechanism.

Where do go from here

As of the time of writing this post, the exchange rate between the naira and the dollar sits at around 854 per dollar, which is currently favorable. However, in the long run, this may not be the case due to the potential impact of import and export activities on the liquidity of the dollar in the market. This could ultimately lead to a drop in the value of the Naira, potentially even reaching a rate of 2000 naira per dollar in the coming months. While I am not entirely convinced that the government's attempts to inject money into the market are solely aimed at attracting foreign investors, I do not believe that this strategy is sustainable in the long run. Nevertheless, I will continue to monitor the situation as it develops. Thank you, and I hope to connect with you again soon.