BRITAIN’S NAIRA ACCEPTANCE: How It 'Pays' You
So, the cheering news came in over the weekend that the United Kingdom will now accept Nigeria’s Naira in trade transactions.
What does this mean for Nigeria? Lagos based money market analyst, Babatunde Komolafe told Bounce News in a chat that the direct implication is that it will reduce demand pressure on the naira.
“What it means now is that if you are travelling to the UK, you will not need to go and change naira into Pound Sterling or Dollars,” Komolafe said.
“Second, if you have children in school or patient in a UK hospital, you will not be looking for foreign exchange to pay school fees or hospital bills, you will just pay the naira equivalent.”
He, however, noted that this does not mean that one will pay less.
The reality is that it is the naira equivalent of the dollar or pound rate that one would have to pay.
According to him, the demand for foreign exchange will reduce because Nigerians do a lot of trade in the UK.
He noted that the reason the UK must have taken this decision is “to increase patronage because of the sheer volume of Nigerians patronizing UK schools, hospitals and all that”.
And for those looking to export products or services to the UK, this also now means that the naira becomes an option in the currency of settlement.
“This decision will also go a long way to make foreign currency less attractive to own, because there is no point really having it when you can pay with the naira,” he added.
Analysts believe this is one of the positive spin-off of Britain’s decision to leave the European Union, EU in 2016.
Britain voted in 2016 to leave the EU, which has forced London to rethink its trade ties with the rest of the world.
But the British High Commissioner to Nigeria Paul Arkwright said in a statement announcing the decision that it was “a clear indication of how much value the UK places on its relationship with Nigeria,” adding that “it will provide a firm foundation for a significant increase in trade and investment between both countries”.
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