By Gwurld4026 
Chatham House: Caution Against Naira Strengthening
Chatham House has advised the Nigerian government against efforts to strengthen the naira, suggesting that its recent depreciation has enhanced Nigeria’s competitiveness. The currency has fallen from 460 to just below 1,500 to the dollar since 2023, marking one of the most significant devaluations globally in recent years.
This depreciation has led to a more favorable balance of payments, with Nigeria recording a trade surplus exceeding N16 trillion in 2024. Foreign exchange reserves have also increased to over $40 billion. Chatham House warns that attempts to reverse the naira’s depreciation could harm these economic gains.
However, some experts caution that while a weaker naira has benefits, it also poses risks, such as encouraging capital flight and widening trade deficits. They argue that the balance of payments improvement may result more from reduced imports than increased exports, suggesting that the current account surplus might not fully reflect enhanced competitiveness.
In summary, while the naira’s depreciation has provided certain economic advantages, experts recommend a cautious approach, balancing the benefits of a competitive currency with potential risks to ensure sustainable economic growth.