Economists task CBN on effective Naira exchange rate

Economists have urged the Central Bank of Nigeria (CBN) to evolve policies to ensure effective management of the exchange rate of the naira.

The experts told our correspondent in separate interviews that the steady fall of the naira against the dollar remained a cause for concern.

They said urgent and necessary steps must be taken to stem the slide and volatility of the currency in the foreign exchange market.

Prof. Ndubisi Nwokoma, Director, Centre for Economic Policy Analysis and Research (CEPAR), University of Lagos, said the apex bank must consider short to long term approach in the effective management of the exchange rate of the naira.

“In the short term, focus should be on efficient demand management of the available foreign exchange, which comes mainly from sale of crude oil.

“Incidences of political interference in foreign exchange allocation needs to be addressed and eliminated. Lots of round tripping is most likely going on presently.

“Tight controls are necessary in foreign exchange allocation. The widening gap between the official market and the parallel market is a sign that the demand management is ineffective,” he said.

He added that promotion of locally produced goods would help to minimise demand for foreign exchange.

For the medium to long term, Nwokoma said focus should be on effective supply management, noting that the current CBN RT200 foreign exchange programme was commendable in this regard.

He urged the federal government to initiate other programmes to diversify the sources of foreign exchange, and also harmonise the foreign exchange.

Akpan Ekpo, Professor of Economics and Public Policy at the University of Uyo, Akwa Ibom, said there was nothing wrong with the managed float regime that the CBN had implemented.

“The foreign currencies like the dollar and the pounds are not our monies. In addition the Naira is not a convertible currency.

“The CBN should watch the market and narrow the distortion between the I-E window and the black market.

“If the ‘market’ is to determine the exchange rate, the inflation pass-through would hurt the economy.

“In the long run the economy has to be diversified to produce and export non-oil goods and services and earn foreign exchange,” he said.