Deputy Governor of the Central Bank of Nigeria (CBN) Kingsley Obiora has described the Banks recent decision concerning the foreign exchange market as a a managed float and not a free float as it is being perceived.
In an interview in Rabat, Morocco, Tuesday, Obiora said the country plans to announce further measures to loosen forex controls, stating that Nigerians should expect more policy changes “in the next couple of weeks.”
He added that the CBN has not intervened in Nigeria’s FX markets since the new policies were introduced.
The CBN chief noted that it has no plans to set the Naira on a totally free float, as no country runs a completely free float.
“There is no country in the world, even the US that has a completely free float. It may be too early to determine if the naira’s exchange rate to the dollar has bottomed out.”
Obiara cited reports by the IMF that suggest that the naira should not be as weak as the parallel market indicated, adding that he expects that the supply of foreign exchange will eventually be unlocked once the price of the dollar reaches a level that both buyers and sellers consider “fair.”
He also noted that he expects Nigeria’s GDP growth to hit 6 per cent by 2024, noting that GDP should approach $700 billion in 4 years, according to Obiora, the report noted:
“The removal of subsidies, along with the convergence of the exchange rates will drive economic growth, especially from next year when the policies start making an impact.
Nigeria’s exchange rate and the Investor and Exporter (I&E) window fell to N770.38/$1 on Monday as the foreign exchange market in Nigeria experienced significant volatility following the Central Bank of Nigeria’s (CBN) operational changes.
The move to allow market-determined forex rates is seen as a major step towards currency reforms in Nigeria, which has been plagued by a chronic shortage of foreign exchange and multiple exchange rates.
According to analysts, a unified and flexible exchange rate regime will help boost investor confidence, increase foreign inflows, reduce import costs, and ease pressure on the naira.
