Tuesday, October 7, 2025
  • Who’sWho Africa AWARDS
  • About TimeAfrica Magazine
  • Contact Us
Time Africa Magazine
  • Home
  • Magazine
  • WHO’SWHO AWARDS
  • News
  • World News
    • US
    • UAE
    • Europe
    • UK
    • Israel-Hamas
    • Russia-Ukraine
  • Politics
  • Crime
  • Lifestyle
  • Sports
  • Column
  • Interviews
  • Special Report
No Result
View All Result
Time Africa Magazine
  • Home
  • Magazine
  • WHO’SWHO AWARDS
  • News
  • World News
    • US
    • UAE
    • Europe
    • UK
    • Israel-Hamas
    • Russia-Ukraine
  • Politics
  • Crime
  • Lifestyle
  • Sports
  • Column
  • Interviews
  • Special Report
No Result
View All Result
Time Africa Magazine
No Result
View All Result
  • Home
  • WHO’SWHO AWARDS
  • News
  • Magazine
  • World News

Home » Featured » IMF warns Nigeria of dollarisation risks amid naira crash, rising inflation

IMF warns Nigeria of dollarisation risks amid naira crash, rising inflation

November 2, 2022
in Featured, News
0
542
SHARES
4.5k
VIEWS
Share on FacebookShare on Twitter

Abuja, Nigeria – As Nigeria battles with a crashing local currency and rising inflation, the International Monetary Fund (IMF) has cautioned that dollarisation is hard to revert.

The IMF gave the warning in a recently released report titled: “Digital Money and Central Banks Balance Sheet”.

In the report, the IMF noted that market participants tend to protect themselves by preferring to hold dollars under high and persistent inflation environments.

Nigeria’s worrisome dollarisation trend: The IMF also acknowledged that most economies operate with a dollar bias for international trade and finance invoicing. However, with the increasing pace of dollar scarcity and high inflation, dollarisation levels in Nigeria have become a concern.

ReadAlso

Uche Nnaji Finally Breaks Silence on Certificate Forgery

Why the Renewed Certificate Forgery Allegation Against Uche Nnaji Is Nothing But Desperate Cheap Propaganda

Part of the report by the Washington-based multilateral lender said:

“Most economies operate with a foreign exchange (FX) (e.g., the dollar) bias for international trade and finance invoicing. Additionally, banking systems in many developing economies are bi-monetary.

ADVERTISEMENT

“A bi-monetary system embodies the failure to conduct monetary policy effectively, i.e., secure price stability, efficient payment systems, and well-functioning financial markets (including long-run financial contracts at comparatively low nominal interest rates). Particularly, under high and persistent inflation, market participants defend themselves by shifting to FX.”

The IMF cautioned that dollarisation is difficult to reverse. The report explained:

“Once a country gets used to a bi-monetary system, the process is not easy to reverse, even when the initial trigger (e.g., high inflation) subsides, a phenomenon known in the literature as hysteresis. The optimal choice between domestic currency vs FX will depend on the monetary framework and the benefits each may offer as they co-exist as two currencies.

“The most common type of dollarization is financial dollarization (FD), or asset substitution, caused by the poor performance of the local currency. The local currency is used more for payment transactions but is replaced by the dollar as a saving asset or store of value, in line with Gresham’s law.”

The IMF report further noted that a bi-monetary system limits the role of the exchange rate as a shock absorber, as real dollarisation implies a high pass-through from exchange rate depreciation to inflation.

“Financial dollarization creates currency mismatches and liquidity risks for the financial system and the economy as a whole. Therefore, the exchange rate amplifies negative external shocks rather than absorbing them.

“Both financial dollarization and real dollarisation jeopardize monetary transmission mechanisms, as inflation expectations are difficult to anchor with a weak interest rate channel. Financial dollarisation-related financial instability would need to be addressed via policy responses such as a central bank forex reserve buildup and associated regulation.”

Nigeria’s forex and high inflation troubles: Nigeria’s inflation rate surged to 20.77% in September 2022, up from 20.52% recorded in the previous month. The food inflation rate in September 2022 was 23.34% yearly, marking an uptick from the 23.12% recorded last month.

According to the National Bureau of Statistics, the increase in the country’s inflation rate may be attributable to the disruption in the supply of food products, the rise in import cost due to depreciating currency, and the general increase in the price of production.

The Nigerian exchange rate has crashed to N800/$1 against the US dollar on the black market, while the exchange rate between the naira and the US dollar at the importer and exporter window (I&E) official window depreciated to N441.13/$1.

Tags: DollarIMFInflationNairaNigeria
ADVERTISEMENT
Previous Post

US deploys 6 Nuclear-Capable B-52 Bombers to Australia amid China’s invasion threat to Taiwan

Next Post

US, Saudi Arabia concerned over Iran possible attack on energy infrastructure in Middle East

You MayAlso Like

News

Chief Uchenna Okafor Celebrates Asagba Prof Azinge at 1st Coronation Anniversary

October 7, 2025
News

Trump Is Losing His Geoeconomic War

October 6, 2025
News

Survivors of wartime sexual violence in DRC finally get justice 

October 6, 2025
News

Moody’s Affirms Africa Finance Corporation’s (AFC) A3 Rating

October 6, 2025
News

Uche Nnaji Finally Breaks Silence on Certificate Forgery

October 6, 2025
News

High Chief Amb. Dr. Usman Ahmed Abdul-Dimka Marks 54th Birthday with Generous Feast for the Less Privileged in Abuja Streets

October 6, 2025
Next Post

US, Saudi Arabia concerned over Iran possible attack on energy infrastructure in Middle East

FG's move to redesign Naira Notes is purely political, no urgency in changing currency - Gov. Obaseki

Discussion about this post

Kingdom in Crisis: Ogwashi-Uku Rejects Obi’s Land Grab, Villages Ready to Declare Autonomy

Faked or Factual: UNN Contradictory Claims on Minister Uche Nnaji Certificate Raise Questions of Credibility

Woman appointed Archbishop of Canterbury 

A Minister of Lies?: Uche Nnaji’s Certificate Scandal and the Collapse of Credibility in Nigerian Governance

Certificate Scandal: University of Nigeria Declares Minister Uche Nnaji Never Graduated

The Guardian Newspaper Names Enugu Commissioner, Dr. Lawrence Ezeh, Amongst 65 Most Inspiring, Award-Winning Business Leaders

  • British government apologizes to Peter Obi, as hired impostors, master manipulators on rampage abroad

    1242 shares
    Share 497 Tweet 311
  • Maids trafficked and sold to wealthy Saudis on black market

    1067 shares
    Share 427 Tweet 267
  • Flight Attendant Sees Late Husband On Plane

    973 shares
    Share 389 Tweet 243
  • ‘Céline Dion Dead 2023’: Singer killed By Internet Death Hoax

    904 shares
    Share 361 Tweet 226
  • Crisis echoes, fears grow in Amechi Awkunanaw in Enugu State

    735 shares
    Share 294 Tweet 184
  • Trending
  • Comments
  • Latest

British government apologizes to Peter Obi, as hired impostors, master manipulators on rampage abroad

April 13, 2023

Maids trafficked and sold to wealthy Saudis on black market

December 27, 2022
Flight Attendant Sees Late Husband On Plane

Flight Attendant Sees Late Husband On Plane

September 22, 2023
‘Céline Dion Dead 2023’: Singer killed By Internet Death Hoax

‘Céline Dion Dead 2023’: Singer killed By Internet Death Hoax

March 21, 2023
Chief Mrs Ebelechukwu, wife of Willie Obiano, former governor of Anambra state

NIGERIA: No, wife of Biafran warlord, Bianca Ojukwu lied – Ebele Obiano:

0

SOUTH AFRICA: TO LEAVE OR NOT TO LEAVE?

0
kelechi iheanacho

TOP SCORER: IHEANACHA

0
Goodluck Ebele Jonathan

WHAT CAN’TBE TAKEN AWAY FROM JONATHAN

0

Chief Uchenna Okafor Celebrates Asagba Prof Azinge at 1st Coronation Anniversary

October 7, 2025

Trump Is Losing His Geoeconomic War

October 6, 2025

Survivors of wartime sexual violence in DRC finally get justice 

October 6, 2025

The rise of the “shadow employee”: When ex-employees still have access

October 6, 2025

ABOUT US

Time Africa Magazine

TIMEAFRICA MAGAZINE is an African Magazine with a culture of excellence; a magazine without peer. Nearly a third of its readers hold advanced degrees and include novelists, … READ MORE >>

SECTIONS

  • Aviation
  • Column
  • Crime
  • Europe
  • Featured
  • Gallery
  • Health
  • Interviews
  • Israel-Hamas
  • Lifestyle
  • Magazine
  • Middle-East
  • News
  • Politics
  • Press Release
  • Russia-Ukraine
  • Science
  • Special Report
  • Sports
  • TV/Radio
  • UAE
  • UK
  • US
  • World News

Useful Links

  • AllAfrica
  • Channel Africa
  • El Khabar
  • The Guardian
  • Cairo Live
  • Le Republicain
  • Magazine: 9771144975608
  • Subscribe to TIMEAFRICA MAGAZINE biweekly news magazine

    Enjoy handpicked stories from around African continent,
    delivered anywhere in the world

    Subscribe

    • About TimeAfrica Magazine
    • Privacy Policy
    • Contact Us
    • WHO’SWHO AWARDS

    © 2025 TimeAfrica Magazine - All Right Reserved. TimeAfrica Magazine Ltd is published by Times Associates, registered Nigeria. Use of this site constitutes acceptance of our Terms of Service.

    No Result
    View All Result
    • WHO’SWHO AWARDS
    • Politics
    • Column
    • Interviews
    • Gallery
    • Lifestyle
    • Special Report
    • Sports
    • TV/Radio
    • Aviation
    • Health
    • Science
    • World News

    © 2025 TimeAfrica Magazine - All Right Reserved. TimeAfrica Magazine Ltd is published by Times Associates, registered Nigeria. Use of this site constitutes acceptance of our Terms of Service.

    This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.