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Osibanjo raises concern about CBN’s management of Nigeria’s exchange rate

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Vice-President Yemi Osinbajo has disclosed that Nigeria’s exchange rate regime remains a subject of concern that must be redressed.

Osinbajo expressed this view in his address at the opening of the 28th Nigerian Economic Summit (NES) where he represented President Muhammadu Buhari on Monday in Abuja.

The 2-day summit, with the theme, “2023 and Beyond: Priorities for Shared Prosperity”, was organised by the Nigerian Economic Summit Group (NESG), in collaboration with the Federal Ministry of Finance.

Osinbajo, who has consistently criticised the country’s exchange rate management, stressed that the CBN must find a solution.

He said, “Our exchange rate regime remains of concern; the discussion that we must have, shorn of sentiments, is how best to manage the situation.

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“This is by finding a mechanism for increasing supply and moderating demand which will be transparent and will boost confidence.

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“I am sure most can recall several efforts have been made in the past, such as the Interbank Foreign Exchange Market, Retail Dutch Auction System, and Wholesale Dutch Auction System, among others.

“All of these discovery mechanisms, which, at least, were transparent, evidence for all to see and they worked”.

The Central bank of Nigeria operates a managed floating exchange rate, a system that allows a nation’s central bank to intervene regularly in foreign exchange markets to change the direction of the currency’s float and/or reduce the amount of currency volatility.

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This system has seen CBN always intervening in the various foreign exchange markets, such as the I&E and Secondary Market Intervention Sales windows, over the year to ensure the Naira exchange rate officially remains at the rate it wants.

But Osinbajo believes a change of approach could be all the Naira needs to regain its lost value.

“So, I think that what we should be looking for is not necessarily any perfect rules, but we must certainly prevent the type of arbitrage that we have,” Osinbajo noted.

Naira on Monday was exchanged at N760- N780 to a dollar on the black market but remains at N441/$ at the official market.

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