Osinbajo warns against further naira devaluation, asks CBN to intervene

Vice-President Yemi Osinbajo has warned against further devaluation of the naira and urged the Central Bank of Nigeria to tinker with the exchange rate to reflect the current realities, noting that current exchange rate is artificially low.

He stated this at the opening session of the mid-term ministerial performance review declared opened by President Muhammadu Buhari at the Presidential Villa, Abuja.

According to him, the currently exchange for the naira makes it difficult to attract foreign investors and Nigeria is unable obtain new dollars.

The naira is currently being exchanged at N565 to a dollar at the parallel market and N411/$ at the official window.

Osinbajo said, “As for the exchange rate, I think we need to move our rates to [be] as reflective of the market as possible. This, in my own respective view, is the only way to improve supply.

“We can’t get new dollars into the system, where the exchange rate is artificially low. And everyone knows by how much our reserves can grow. I’m convinced that the demand management strategy currently being adopted by the CBN needs a rethink and that is just my view.”

The VP expressed confidende that the CBN would be able to address the issues, adding, “All those are issues that when the CBN governor has time to address, he will be able to address in full.”

He also noted that the apex bank was competing the ministries, departments and agencies in fiscal terms, arguing, “There must be synergy between the fiscal and the monetary authority. We must be able to deal with the synergy; we must handle the synergy between the monetary authority, the CBN, and the fiscal side.

“Sometimes, it appears that there is competition, especially on the fiscal side. If you look at some of the interventions, you will find that they should be managed by ministries.

“The ministry of industry, trade and investment should handle MSMEs interventions, and we should know what the CBN is doing. In other words, if the CBN is intervening in the MSME sector, it should be with the full cooperation and consent of the ministry of industry.

Reacting to Osinbajo’s position on the exchange rate and request for the CBN to intervene, a professor of capital market, Uche Uwalake, said, “The first casualty will be the 2022 Appropriation Bill. It means the 2022 budget, which is predicated on N410.15 per dollar is dead on arrival.

“The Vice President obviously means well. But this statement is capable of triggering panic buying and speculation in the forex market (official and parallel) and further complicating things for the CBN. “

 

 

“Sometimes you will get people who are benefiting more than once because we simply have no line of sight on what is going on, on one side.”