CBN should abolish the official exchange rate – BDC operators
Please share this story:
The Association of Bureaux Des Change Operators of Nigeria has urged the Central Bank of Nigeria to float the naira to end its further depreciation.
ABCON Chairman Alhaji Aminu Gwadabe made the call on Saturday in an interview with News Agency of Nigeria in Lagos.
Gwadabe said the CBN should do everything in its power to undertake a sustained injection of dollars into the market to reverse the loss of value of the naira in the parallel market.
"It may seem counter-intuitive, but the way out of the current frenzy is to abolish the official fixed exchange rate and let the Naira float.
"CBN should simultaneously undertake large-scale dollar intervention in the open market which can inspire confidence in the Naira and quell the current fall.
"Once there is a significant positive move, the market will react and in all likelihood trigger an avalanche of panic selling and further support the Naira," Gwadabe said.
The financial expert said the CBN could gradually redeem the dollars used in its intervention in the open market at a lower exchange rate for a decent profit.
He argued that the next phase would be to strengthen the naira in the medium to long term, adding that fiscal and monetary policies should be aligned to boost the tradable sector.
On the CBN's Monetary Policy Rate (MPR) at 13%, Gwadabe said the adjusted rate would stifle growth.
He said efforts to reduce inflation in an underperforming economy should focus on stimulating supply.
"Raising the MPR contracts the supply side, it's a bad prescription.
"Let's not copy the Americans who target inflation with Fed rates to rein in the money supply; their factors of production have been fully mobilized, ours is less than 20% and requires supply stimulation.
"US GDP per capita is about $66,000, ours is $1,500 in real terms, underscoring the need for pro-income monetary policy. offer," Gwadabe said.
Please share this story:
The Association of Bureaux Des Change Operators of Nigeria has urged the Central Bank of Nigeria to float the naira to end its further depreciation.
ABCON Chairman Alhaji Aminu Gwadabe made the call on Saturday in an interview with News Agency of Nigeria in Lagos.
Gwadabe said the CBN should do everything in its power to undertake a sustained injection of dollars into the market to reverse the loss of value of the naira in the parallel market.
"It may seem counter-intuitive, but the way out of the current frenzy is to abolish the official fixed exchange rate and let the Naira float.
"CBN should simultaneously undertake large-scale dollar intervention in the open market which can inspire confidence in the Naira and quell the current fall.
"Once there is a significant positive move, the market will react and in all likelihood trigger an avalanche of panic selling and further support the Naira," Gwadabe said.
The financial expert said the CBN could gradually redeem the dollars used in its intervention in the open market at a lower exchange rate for a decent profit.
He argued that the next phase would be to strengthen the naira in the medium to long term, adding that fiscal and monetary policies should be aligned to boost the tradable sector.
On the CBN's Monetary Policy Rate (MPR) at 13%, Gwadabe said the adjusted rate would stifle growth.
He said efforts to reduce inflation in an underperforming economy should focus on stimulating supply.
"Raising the MPR contracts the supply side, it's a bad prescription.
"Let's not copy the Americans who target inflation with Fed rates to rein in the money supply; their factors of production have been fully mobilized, ours is less than 20% and requires supply stimulation.
"US GDP per capita is about $66,000, ours is $1,500 in real terms, underscoring the need for pro-income monetary policy. offer," Gwadabe said.
What's Your Reaction?
