So yeah, Naira trades at about 800/ $ and some folks seem surprised and don't think the recent news of CBN redesigning Naira and increasing the supply has anything to do with this development. Well, sorry, but it has everything to do with the tanking of Naira. The average gullible citizen would be of course believe everything the government says and celebrate the New Naira notes, like its some achievement as they do not think of the economic impact this decision has on the economy.
The new notes aren't yet in circulation and Naira is already tanking hard. At this rate, I can't begin to imagine what level it would crash to by December/January when the newly designed currency would be fully circulation.
Is a redesign truly the solution to hoarding?
I'm no economist, but the I don't think the solution to hoarding any currency is to redesign it and print more. The hoarders if they exist don't make up to 1% of the population of the entire country. The hoarders are those in government and printing more money would only cause chaos. To understand better, take for example cryptos. Cyptocurrencies appreciate in value over time because their supply is either fixed or reduced (burning) while the demand grows. There are hoarders in every economy, even in the crypto space, but that doesn't warrant an increase in supply of the currency. That has proven countless times to be catastrophic to the price of the currency.
One disturbing fact also is that the redesigning of Naira(such a crucial and important step) wasn't in this year's national budget and so many top and important officials at the CBN were not consulted about this huge step.
My theory is that right now, the current Naira is being dumped like crazy for other currencies by the so called hoarders and they'll exchange it for the new Naira when they need it. By then, they'll probably be getting more Naira since Naira would have most likely crashed harder. To think that redesigning a currency is how to stop hoarders is just absurd in a world where anyone could exchange their massive funds to any currency in minutes.
As for the case that the demand for Naira would increase because of the redesign, I highly doubt that. Well, let's see how this plays out.