Financial experts on Friday picked holes in the Central Bank of Nigeria’s (CBN) flexible exchange rate policy barely five days after it took-off.
They told the News Agency of Nigeria (NAN) in Lagos that given the present challenges, economic recovery should have preceded the policy for effective implementation.
Dr Evans Osabouhien, a Senior Economist at the Covenant University, Ota in Ogun, said the current demand for the greenback outstripped its supply at the foreign exchange market.
Osabouhien said that leaving the exchange rate completely at the mercy of the forces of demand and supply could be counter-productive in the long run.
“The market is lopsided and the demand for the dollar is far more than its supply.
“No economy can leave its exchange rate totally to the market forces,’’ the economist said.
The don noted that the challenges in the global oil market, fuelled by low oil prices had translated to a drop in the foreign exchange accruable to the nation from the sale of crude oil.
While adding that the forex market was capitalist-based, the economist said that an economic recovery should have preceded the commencement of the new forex regime.
Osabouhien, however, called for a reduction in the importation of consumables and an increase in the nation’s export portfolio.
For Dr Chijioke Mgbame of the Department of Accountancy, University of Benin, given the scarcity of the greenback and its shortage of supply, the policy might not achieve its goal.
Mgbame said that the prime objective of the CBN should have been to boost the nation’s foreign exchange earnings through the rejuvenation of local industries.
According to him, the CBN should continue to discourage the importation of consumables into the country.
“We should increase our sources of foreign exchange earnings and the forex market will begin to witness stability.
The accountant urged the apex bank to continue to exercise stricter control over the market to discourage the activities of currency speculators.
“My fear is that corrupt Nigerians will try to manipulate the policy to their selfish advantage. Let the CBN strengthen its regulation on the market,’’ Mgbame said.
NAN reports that the CBN opted for the liberalisation of the foreign exchange market at the end of its last Monetary Policy Committee (MPC) meeting.
The new forex policy which took effect on June 20 had seen a narrowing in the difference between the official interbank rate and the parallel market rate.
Financial experts and stakeholder are keenly watching to see the sustainability of the new policy in the coming weeks. (NAN)