Kingsley Moghalu, a former deputy governor of the Central Bank of Nigeria, has encouraged the Federal Government and the Central Bank of Nigeria to do away with their several exchange rates in order to address the naira’s problems.
Moghalu made the prediction as the naira was trading at about N760 on the black market, which economists consider to be a reasonable price for the currency.
The naira trades at N441.38 to the dollar in Nigeria’s multiple exchange market, the Nigerian Autonomous Foreign Exchange Rate Fixing (NAFEX).
LATEST: Naira Bounce Back Against Dollar At Black Market
As of Tuesday, the currency has fallen to N760 per dollar on the black market.
He said in a tweet on Tuesday: “A fixed exchange rate that overvalues the naira is artificial because it’s not backed by the value of our exports. It promotes an import economy and leads to dollar scarcity. The constant depreciation of the Naira in the parallel market therefore stokes inflation.
“@NigeriaGov and @cenbank should obsess less on maintaining an artificial value of our currency and focus on a truly productive economy that exports ever more value-added products.”
The approach of discouraging import into the nation, according to Moghalu, is not ideal because it leaves possibility for smuggling.
He contends that when local production is encouraged, locally produced goods will compete with imported ones, giving both the wealthy and the poor more options.
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He said, “No need to ban imports. It doesn’t work and only creates smuggling.
“Just use higher tariff rates that make imports expensive, and create incentives for local manufacturers to be more competitive vis a vis imports from China etc. The rich can afford imported champagne.
“The average Nigerian can buy locally produced goods. A Naira that’s bought and sold at natural market prices will also attract massive amounts of foreign currency investment into our country.
“The combination of such investment and the dollars we earn from exports will eventually strengthen the Naira to its natural value. Multiple exchange rates must be abolished for the Naira to thrive.
“All this, of course, requires a truly independent and professional central bank. Glad leading presidential candidates @atiku @PeterObi and @officialABAT are all thinking about this matter. It’s fundamental for realigning the economy to create more wealth for Nigeria & Nigerians.”
See How Much Dollar Exchange To Naira Today 10 December 2021
Similar recommendations to scrape numerous foreign exchange markets with considerable pricing differences were made by the Nigerian Economic Summit Group, an economic research tank.
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