Economic experts have identified some of the major reasons behind the worsening situation of foreign exchange crisis in Nigeria.
As of Tuesday, the exchange rate stood at over N1,200/$ at parallel market as the dollar scarcity bites harder.
The Chief Executive Officer, Corporate Finance Group, Mr Adetilewa Adebajo, said that illegal financing in Nigeria was one of the major issues causing foreign exchange problems.
He stated this while discussing Nigeria's economy under President Bola Ahmed Tinubu during an interview on Channels TV's Politics Today.
He said that illegal financing gave way to inflation, which in turn weakened Nigeria's economy.
Adebajo said, "Let us now understand what is causing this foreign exchange problem. First of all we have N30 trillion in Ways and Means financing, which is an illegal financing means. The Ways and Means financing under CBN balance sheet. So Ways and Means financing is 30 times over the limit, which is completely excessive. That is putting pressure on inflation.
The biggest challenge we have today is inflation. Real rate and the real use are negative. If you put N10 million in your account today you will be recording a loss of about 11% every year.
"Nobody wants to lose value because of inflation. Reduce the level of inflation, we will also reduce demand for foreign exchange. Because foreign exchange demand is not only going toward demand and services, people are also using it as a stock of value."
Also, a Professor of Economics at Lagos Business School, Bonga Adi, noted even if the government secured forex to inject into the system as promised, the appropriate mechanism must be adopted in order to stabilise the naira.
He identified three major challenges facing Nigeria's economy to include exchange rate instability, inflation, and high interest rates are undermining investor confidence and making it difficult for businesses to operate.
He said, "We have three challenges in the economy right now: exchange rate, inflation and interest rate, these are the core pillars, when you look at these, doesn't really aspires any investor's confidence, that is the fact.
"What people expected to hear, what are the necessary things need to happen today so that they don't wake up in the morning and hear that the $1 is N1,500.
"And the way the exchange rate is going that is the same way inflation is following, so we don't have price stability, an investor will be looking at all of these.
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"Now with our situation here where we have inflation, instability in prices, unpredictability, who will be willing to come in."
Adi welcomed the government's announcement of $10 billion in funding to ease the suffering of the people, but emphasized the importance of the mechanism around it.
"Yes, I agreed that having $10 billion coming in the couple of weeks will somehow ease the suffering we have in the supply side of forex market but it is important for us know what are mechanism around that $10 billion," he said.
Meanwhile, Tope Fasua, the Special Adviser to the President on Economic Affairs in the Office of the Vice President, stated the government is expecting the $10 billion inflows in a matter of weeks.
In an interview on Channels TV, Fasua stated that the government was working to address the challenges responsible for the continuous depreciation of the naira.
He said, "We know challenges are taking people to the black market but like the Minister of Finance and Coodinating Minister of the Economy said, what is going now is the case of tail wagging the dog, and I have also said that for so many times that the black market is dictating where everybody else goes to.
"So the Minister of Finance said what they are looking at is the case where the tail will stop wagging the dog.
"All that is going on now I believe that what the president said as quoted by the Finance Minister, they are expecting some good inflows of almost $10 billion in a matter of weeks not month.
"And I heard them say something about they are speaking to some foreign investors who are willing to come."
