HOW CORRUPTION FIGHT IS CAUSING THE FALL OF NAIRA AGAINST WORLD CURRENCIES PART 2



ROUND TRIPPING OF CURRENCY
(please read my previous post on economy before reading this)
It is due to the pegging of our local currency to the foreign currencies that is helping fuel this economic quagmire we are in.
For instance imagine a scenario were the difference between the official rate and the price at the parallel market is as much as N70 (e.g. official rate= N220 to $1 and at the black market N290 = $1) What this means in practical terms is this, if I can get about $2million dollars at bank rate from CBN or other banks I will simply go to black market and earn N140Million simply selling the dollars at the parallel market price.  Imagine if I can do this weekly for a month, I will be smiling home with N11200million or N1.12billion.
This in turn will fuel inflation because the goods for which the money was approved for will never come into Nigeria and due to the pressure put on the naira the local currency (i.e. naira) will keep falling.
I will keep you posted on how these economic decisions are leading Nigeria into bigger problems than we are currently in.
SOLUTION: please they should allow the forces of demand and supply determine the price of dollar so as to stop round tripping of our local currency.

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