With the recent shifts in Nigeria’s foreign exchange landscape, Anayo Nwosu, a seasoned banker, has shared valuable insights on the evolving forex market, advising businesses and individuals on strategic financial positioning.
“The commencement of local petroleum product supply by the Dangote Refinery will significantly reduce the pressure on the demand for dollars in Nigeria. For a long time, Nigeria has spent heavily on importing petroleum products, which fueled the demand for foreign currency. Now, with local production, that demand will drop,” Nwosu noted.
Nwosu also highlighted the broader impact of Dangote’s operations on Nigeria’s foreign exchange inflows. “Dangote will not only meet local demand but also generate foreign exchange through exports to sub-Saharan Africa. This is a game-changer. The refinery’s reach covers West, Central, and Southern Africa, and it will control the sale of aviation fuel across the continent. It’s no surprise that 16 European refineries are considering shutting down due to this competitive threat.”
Despite these benefits, Nwosu cautioned about potential challenges. “If the Federal Government prioritizes selling crude oil to meet Dangote’s needs, Nigeria’s FX earnings from crude oil will decline, which may reduce the FX available to the Central Bank of Nigeria for official sales to banks. This could impact importers and businesses that rely on FX for Letters of Credit and other transactions.”
However, Nwosu pointed out a crucial trend that savvy business owners should note. “The naira has already appreciated between N150 and N200 in just a week. This indicates that the exchange rate for the dollar to naira has started falling. Smart businesses should take advantage of this and hold their funds in naira, not dollars, as the market adjusts.”
His overall advice is strategic but simple: “Importers and distributors of foreign products must read the economic weather well. The forex landscape is changing rapidly, and those who act now will be better positioned for future gains.”
Anthony Emeka Nwosu
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