Why The Naira Remains Strong Despite Election Spending
It had been expected that once politicians start spending money to woo voters ahead of the 2019 elections, prices of goods and services would go up due to the increased money circulation.
Had this happened, the naira would have naturally weakened, but the naira did remain strong and even inflation remained subdued at 0.07% in January.
The reason for this, according to the President, Association of Bureau De Change Operators of Nigeria, ABCON Aminu Gwadabe, is because the internal control mechanisms put in place by INEC contributed greatly to checkmating political spending.
Gwadabe also cited the awareness created by the Economic and Financial Crimes Commission against trading in illicit funds as contributing to the stability of the naira.
He also noted that uninterrupted inflows from the International Money Transfer Operators and Diaspora remittances helped in making the market liquid.
The financial expert said that the pro-activeness of the CBN in its series of interventions at the market, and its strategic partnership with BDCs helped in the stability of the Naira.
He added that investors’ confidence in the market was also growing.
Prior to the election, the market was apprehensive that speculators would leverage political spending to crash the Naira.
However, hours to the commencement of the 2019 elections, the Naira remained stable, closing at N358.8 to the Dollar at the end of Friday trading.
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