The Central Bank of Nigeria has constantly intervened to save the international exchange rate of the Nigerian Naira against the US dollar by using the Nigerian foreign reserves as the Naira's shock absorber. Is this crude and outdated economic approach or policy of the Nigerian government truly sustainable in all truth, honesty and reality? Is this financial method the best practical solution to save the Naira from further collapsing in its exchange rate value internationally? How can Naira be saved and sustained for a long time by the Nigerian government?
The truth is that the Central Bank of Nigeria cannot successfully save the Naira for a very long time to come with its present intervention approach. The economic reality on the ground is that rapid increase in the international demand for the Nigeria's goods and services are the only viable practical ways to have a strong Naira now and in the future in Nigeria. The only product today that Nigeria has, produces and sells to the world is her oil and the United States has remained one of the most reliable buyers of this oil for decades until the recent sudden shift by the America from the Nigeria's oil to her own vast reserves of her untapped oil shale.
The United States' oil shale reserves are enormous, totaling at least 1.5 trillion barrels of untapped oil (40 times the size of the Nigeria's proven and untapped oil reserves) that are buried under the landscapes of Colorado and Wyoming. The future of the Nigerian Naira is tied directly to the daily sale of her 2.5 million barrels of oil that America alone buys about 1 million barrels of this oil from Nigeria on daily basis since the 1970s until recently. Every attempt to save the Naira by the Central Bank of Nigeria has resulted in the rapidly dwindling of the Nigeria's foreign currency reserves (her foreign savings account or her emergency funds) and more borrowing from the World Bank, African Development Bank, Paris Club and the rising China to run her government year in and year out.
The Nigerian Naira has no certain future as long as this oil remains the only thing that Nigeria sells to the world in 2013. The Nigerian Naira faces a very bleak future as long as this oil is no longer in high demand globally. The Nigerian Naira has no future as long as the oil prices fluctuate internationally and the Nigeria's annual budget is pegged on the unreliable international oil prices. The Nigerian Naira will continue to depreciate in its value against the US dollar as long as the entire Nigerian economy continues to be built on this oil alone and the 95% of Nigeria's foreign earnings are still coming from this oil and oil alone. Time will surely tell.
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