- The Chartered Institute of Bankers of Nigeria (CIBN) has said the policy of the CBN to float the naira is terrible for the economy
- They revealed that the policy created a wide gap between the official and parallel markets
- The Lagos Chapter of CIBN, Adeyemo Adeoye, said the CBN should adopt a managed float to stabilise the naira
According to the Chartered Institute of Bankers of Nigeria (CIBN), the foreign exchange reform introduced by the Central Bank of Nigeria (CBN) involving floating the naira is unsustainable for economic growth.
The institute disclosed this at a press conference to kick-start its 2023 Lagos Bankers’ Nite with the theme, Exchange rate unification: Global implications for households, organisations, and the country, slated for August 18, 2023.
Ayeoye recommends managing float
The Lagos branch chairman of CIBN, Adeyemo Adeoye, said the policy to float the naira needed to be stronger.
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He said that the country should adopt a managed floating rather than let the naira float freely, allowing the forces of demand and supply to dictate.
He warned that the free-floating model was based on speculation.
Reports say the Lagos chapter boss of CIBN revealed that before the unification policy, there existed an N20 difference between the parallel and official markets, but it has now risen to over N200.
He said in other economies, currency supply is reduced by increasing banks’ reserve ratio.
Gap between parallel, official markets widens by 80%
He stated that the move would impact the currency’s value, saying that the gap between the official and parallel markets is about 5% in other countries, but Nigeria’s is about 80%.
Adeoye asked President Bola Tinubu to prioritise investment to enhance Nigeria’s productive sectors.
According to him, the Bankers’ Nite has been an ideal gathering for high-net-worth bankers in Lagos, financial industry leaders, and key stakeholders in the Nigerian economy.
On June 2023, the Nigerian government announced the free-float of the local currency, leading to massive volatility.
The naira took a tumble as the parallel market slipped further away from the official market, creating a chasm in the Forex market.
Naira takes hit but makes comeback
Penultimate week, the naira tumbled to N950 to a dollar as forex scarcity echoed across the market.
The development led to a meeting between the Acting Governor of CBN, Folashodun Shonubi, and President Bola Tinubu.
Shonubi said the fall of the naira was not driven by demand and supply but by Forex speculators.
The apex bank’s boss promised to tackle speculators and said the bank would intervene and pump more forex into the market.
The announcement led to an appreciable performance of the naira, which bounced back against the dollar to exchange at N860 per dollar as of August 17, 2023, in the parallel market.
Black market operators in pains as dollar crashes to N880 amid CBN’s threats to clamp down on speculators
Legit.ng reported that the Nigerian currency made a significant comeback at the parallel market on Wednesday, August 16, 2023, as it rallied against the US dollar.
Checks by Legit.ng show that the naira opened the day in the black market with dealers quoting N880 to a dollar and slightly depreciating to N910 to a dollar.
The development is a significant boost for the local currency, which has been on a free fall since the Nigerian Nigerian government announced a free float of the naira.