Nigerian Vice President Says Present Naira Change Fee ‘Artificially Low’ – Economics Bitcoin Information
Nigerian Vice President Yemi Osinbajo recently warned that the country’s official naira exchange rate of N411 is artificially low for every dollar. This exchange rate, so Osinbajo, discourages foreign exchange entry into the country.
The naira exchange rate must reflect market realities
As a result, Vice President Osinbajo says he wants the Central Bank of Nigeria (CBN) to allow the naira to “reflect the realities of the market.” According to a report by The Cable, Osinbajo also wants the CBN to reconsider its currency management strategy. He explained:
We cannot bring new dollars into the system where the exchange rate is artificially low. And everyone knows how much our reserves can grow. I believe the demand management strategy currently being pursued by the CBN needs to be reconsidered and that is just my view.
However, Osinbajo suggested that such a reassessment only be undertaken when the CBN governor has time to address the issue.
Depreciation in naira
Since the first half of 2020, the naira has depreciated continuously against major currencies such as the US dollar and the British pound. At the time of writing, the official naira to USD exchange rate is just over 411 for every dollar. This exchange rate is almost 40% lower than the parallel market rate of 570 naira for each dollar.
Despite this discrepancy between the official rate and the black market rate for the naira, the CBN has so far refused to devalue the currency. Instead, the central bank has tracked individuals and corporations accused of driving the naira down.
Meanwhile, Osinbajo warned the CBN not to interfere in the fiscal part of the economy. However, should such intervention be necessary, the CBN should only act if it has “the full cooperation and approval of the Ministry of Industry,” said Osinbajo.
Do you agree with the vice president’s naira feelings? Let us know what you think in the comments section below.
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