1st June, 2023
The Central Bank of Nigeria (CBN), on Thursday, June 1, debunked the claim that it has devalued the naira to N631 per dollar at the Importers and Exporters’ (I&E) window.
Daily Trust had reported that CBN devalued the Naira to N631 to the dollar from N461.6 it sold at the Importers and Exporters (I&E) window the previous day, Daily Trust gathered.
Reacting to the news, the central bank described the report as “fake news,” urging members of the public to disregard it as such had not been done.
Although there is a possibility that CBN will harmonize the different exchange rates.
President Bola Tinubu had announced on Monday that his government would want the CBN to harmonise the different exchange rates.
The president said: “The central bank must work towards a unified exchange rate…they should direct the fund from arbitrage to meaningful investment”
“Interest rates need to come down, currently too high, anti-people, anti-business, we have to work on all of those”
The President also called for a “thorough cleansing” of monetary policy suggesting a direct rebuke of the current central bank and its policies aimed to bringing down inflation and maintaining exchange rate stability.
President Tinubu’s decision to unify the exchange rate reflects a departure from the multiple exchange rate system that was in place during the previous administration.
The multiple exchange rate regime often led to disparities and inefficiencies, creating opportunities for arbitrage and hindering the growth of the economy.
By implementing a unified exchange rate, President Tinubu aims to streamline the foreign exchange market and reduce distortions, thereby attracting more investments and boosting economic stability.
The unification of the exchange rate is expected to enhance transparency and create a level playing field for businesses operating in Nigeria.
It will simplify transactions, eliminate complexities associated with multiple exchange rates, and provide a more accurate reflection of the true value of the Nigerian currency, the naira.
This move is likely to improve investor confidence, attract foreign direct investment, and promote economic growth in the long term.
However, Tinubu’s decision to unify the exchange rate and also force interest rates dow in Nigeria carries potential implications for the independence of the Central Bank of Nigeria (CBN).
Historically, central banks have been granted a significant degree of autonomy to execute monetary policies without undue interference from the government.
However, with the unification of the exchange rate, the CBN’s role in managing the country’s currency valuation may undergo a shift.
As the government takes a more active role in determining and directing exchange rate policy, concerns may arise regarding the independence of the CBN and its ability to make impartial decisions based on economic considerations.