Policy Daunting, Markets Uncertain, Citizens Groan – LBS EBS – Aug 2016

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Sunday, August 07, 2016 3:17PM /FDC

Six weeks after the flexible exchange rate policy with the naira at N400/$, Nigerians are scratching their heads with two questions on their lips.

1.  Where is the bottom?

2. Why is the market value of the naira much weaker than its true value?

The answer is that whenever policy statements conflict with policy signals, the uncertainty premium increases.

The naira has since been a victim of mixed signals, losing 60% of its value. With the much expected inflow of dollars yet to materialize, the impact of a weak naira on prices, output, investment and unemployment remains profound.

This edition of the LBS Breakfast Club, Bismarck Rewane and the FDC Think Tank attempt to make sense of an embattled currency that seems to defy logic.

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