According to a reports on Sunday, 3 March 2024, There are signs that the country’s domestic and multinational businesses are at greater danger of foreign exchange losses as a result of the ongoing difficulties with the exchange rate.
The average rate of exchange at the Nigeria Autonomous Foreign Exchange Market, or NAFEM, raised to 144% between June of last year and March 1, 2024.
It was N634.56/$ on average in June 2023 and N1,548.25/$ in March.
This also holds true for the black market, or parallel market, where the exchange rate for a dollar was N1,600.00 as of March 1, 2024.
According to analysts and economic experts, the consequences of the foreign exchange losses include the loss of jobs.
The government’s decrease of the company’s income tax profits, the nonpayment of dividends to shareholders, and the closure of plants that could lead to more multinational corporations leaving the country.
Analysts claim that the depreciation of the naira, together with an increase in interest rates, resulted in higher operational costs for multinational corporations (MNCs).
Since their primary expenses, such as financing charges, are expressed in foreign currencies.
In July, the Monetary Policy Rate (MPR), which is the Central Bank of Nigeria’s benchmark interest rate, was raised for the eighth time in a row by the CBN.
The CBN further upped the interest rate to 22.75% during the most recent Monetary Policy Meeting (MPC).
Which was held on February 27 and 28.
Significant increases in financing costs have the potential to dilute all of the substantial earnings that businesses make, leaving them with negative net profits.
