Contrary to reports making the rounds, the Central Bank of Nigeria (CBN) has denied devaluing the naira, even as it pledged its commitment to gradual rate convergence.
The Deputy Governor in charge of Economic Policy, Dr. Kingsley Obiora, made this known, Thursday, in Abuja at the Fiscal Liquidity Assessment Committee (FALC) retreat.
Earlier reports had it that the Central Bank of Nigeria, CBN, has devalued the naira to N631 to the dollar as against N461.6, in an attempt to unify the Nigeria’s exchange rate in order to stimulate the economy.
AbdulMumin, described the report as false, pointing out that the Investors and Exporters (I&E) window was trading at N465/$ yesterday morning. He noted that the apex bank was committed to a gradual convergence of the rates around I&E window.
President Tinubu had at his inaugural speech on May 29, 2023, minutes after being sworn in as the 16th president of the Federal Republic of Nigeria, emphasized the need to clean up the monetary policy, stressing that this will direct funds away from arbitrage into meaningful investments that power the real sector of the economy.
This policy change will close up the wide margin that has existed between the I&E window and the parallel market, a situation experts claim have unduly encouraged round-tripping with the Bureau De Change operators, and targeted towards stopping completely the sale of forex to the BDC’s.
Tinubu had reportedly held a closed door meetings, Tuesday, with the governor of the Central Bank, Godwin Emefiele with some top officials of strategic institutions. Although, no disclosure was made as to what was discussed at the meeting, but experts assume it may not e unconnected with the new monetary policy.
Following the announcement of a unified exchange rate, some economists have supported it, saying it would be good for the economy, but have warned that the unification should take a cautious, strategic and gradual approach considering the effect it will have in the market.
According to the President of the Association of Bureau De Change Operators of Nigeria (ABCON), Alhaji Aminu Gwadabe, he said that unifying the country’s exchange rates would require a long, gradual process to achieve, adding that the policy of a unified exchange rate is a good one, but that it would distort the economy.
It will be recalled that the World Bank have repeatedly recommended unifying exchange rates as part of comprehensive reforms to strengthen the Nigerian economy, stabilize the currency, and enhance economic growth.
However, many believe that the naira may continue to face strong pressures from the very strong dollar especially with predictions of another U.S interest rate hike in June by the Federal Reserve.
achieving a strong and unified exchange rate of the naira to the dollar may be difficult the naira faces strong pressures from the greenback as Fed officials increasingly predict another U.S. interest rate hike in June, and the dollar has strengthened across the board this week as Congress finally set the tone for a two-year debt ceiling hike.