Why it is risky to convert your naira to dollars or USD(T) – Nairametrics
Inflation data is out. 17%. The common interpretation is that the purchasing value of your money has declined by 17%. A quick comparison of inflation data with other countries – Saudi Arabia is at 0.4%, the United Kingdom is at 3.2%, and in the United States, it’s at a “transitory” 5.3%.
The consequence of this is Nigerians are finding different means or investment vehicles to preserve their hard-earned naira from devaluation. They want their 100,000 naira to be 100,000 naira on a Month-on-Month basis.
The common trend now to achieve this is to “buy the dollar and preserve their naira earnings.” While in theory, this sounds like a well-thought-out plan or hedge as we call it in finance, there are certain flaws to it.
Engaging in this form of hedging – inadvertently makes…