Amidst the backdrop of the political turmoil in Niger Republic, the Nigerian government found itself preoccupied as the naira took a sharp nosedive in the foreign exchange markets last week. The currency plummeted to an unprecedented high of N955 to US$1 on Thursday, sending shockwaves through the business community and triggering concerns among Nigerians. With mounting apprehension, both President Bola Tinubu and the Central Bank of Nigeria are under increasing pressure to swiftly and strategically intervene to prevent a loss of control over the currency and the economy.The unfolding situation is alarming, with the naira’s decline gaining momentum following Tinubu’s directive to the Central Bank to merge exchange rates two months ago. The objectives of establishing a “realistic” rate and closing the wide arbitrage gap between official and informal market rates have proven elusive. Despite the official exchange rate of N767.76/$, the gap, which serves as fertile ground for illegal arbitrage, has surged from N100/$ to a concerning N200/$.Compounded by a lack of an economic management team, direction, or cabinet, and the absence of accompanying regulatory reforms, the naira’s depreciation has been exacerbated by high inflation and economic contraction. The ominous trajectory indicates that the naira could breach the N1,000/$ threshold and beyond, raising valid fears that the Central Bank’s control over the situation could slip away, leading to dire consequences. Adding to the unease, the International Monetary Fund (IMF) emphasized last week that the prevailing “loose fiscal and monetary policies” are hindering the naira’s stabilization efforts.Wale Edun, an esteemed economic advisor to Tinubu and a ministerial nominee, has signaled that a more realistic rate would be around N700/$, highlighting that the elevated rates lack a foundation in the economic fundamentals. The Economist Intelligence Unit’s previously forecasted N1,000/$ rate until 2027 now appears overly optimistic, with the potential for a much harsher reality to manifest well before then.This predicament, while not unexpected, stems from constrained supply due to diminished non-oil export earnings. The demand side is distorted, driven by speculators, hoarders, and extensive, unchecked money laundering orchestrated by both state and non-state actors. The market’s dynamics are manipulated by politicians, public office holders, criminals, and well-connected contractors, enabled by inadequate oversight of deposit money banks and currency exchange services. These actors flood the market with ill-gotten naira, rather than legitimate commercial enterprises or producers.Tinubu must pivot away from his unfocused, poorly planned, and disjointed decisions towards implementing strategic, comprehensive economic policies. It’s imperative that he assembles an Economic Management Team (EMT) and seeks the counsel of economists and technocrats, rather than relying solely on the array of politicians he has nominated as ministers.To avert the risk of losing control over the naira and succumbing to hyperinflation, the Central Bank should consider temporarily injecting funds into the forex market. Subsequent steps should involve reining in Bureau de Change operators and errant banks to curb illicit activities such as round-tripping and illegal arbitrage. Enhanced collaboration with other regulatory bodies, alongside anti-corruption and law enforcement agencies, is essential to monitor market participants and swiftly penalize violations.In the face of mounting challenges, including elevated unemployment, inflation, shrinking production, and dwindling public revenues, a robust stimulus is vital to initiate a recovery. Strategic sectors such as agriculture, pharmaceuticals, transportation, and small businesses must be safeguarded. Particular attention should be directed towards Small and Medium-sized Enterprises (SMEs), including measures to subsidize their power supply, facilitate access to low-interest credit, and alleviate burdensome taxes and levies.While navigating through tough choices is inevitable, they must only be made following meticulous diagnosis and preparation. The scarcity of dollars has allowed the black-market operators to dominate supply, subverting the intention of narrowing the gap between official Importers and Exporters window rates and parallel market rates. A temporary reinforcement of the market to stabilize the naira for a brief period, channeled towards legitimate businesses, is an advisable move to arrest the currency’s downward spiral.Given the gravity of the situation, the economy necessitates unwavering attention and exhaustive planning to avert a collapse. Tinubu must henceforth refrain from impulsive measures and instead prioritize a measured and well-considered approach.