Nigeria’s monetary policy regime was once tilted in favour of the elites but will onwards be fair to all, President Bola Tinubu told the nation Sunday morning in a televised speech marking Nigeria’s 63rd Independence Anniversary.
“Henceforth monetary policy shall be to the benefit of all, not to the exclusive province of the powerful and the wealthy,” he affirmed while talking about the clean-up of the Central Bank of Nigeria (CBN), where a recent shake-up sacked the bank’s entire leadership.
Since assuming office, President Tinubu has implemented many reforms targeting one of the most comprehensive revamp of Nigeria’s foreign exchange system to date.
Apart from rejigging the CBN’s top hierarchy, he has introduced a series of measures to allow the official exchange rate of the naira to the dollar and other major currencies to weaken to a level that placed it close to the parallel market rate.
But that drive, even though crucial to attracting foreign investors, has brought more agony, as the gulf between the two rates, which closed up briefly in June, has widened further to the detriment of dollar users, particularly import-dependent manufacturers.
The official exchange rate, 461 to a dollar on the day of the president’s inauguration, stood at 776 at market close on Friday, meaning the naira has depreciated by 68.3 per cent in the past four months, making it Africa’s worst-performing currency as tracked by Bloomberg.
The gap between the official rate and the black market rate has widened by 29.4 per cent ever since the two attained convergence in June with the dollar exchanging for as high as 1004 on the street on Friday.
“Those who sought to perpetuate the fuel subsidy and broken foreign exchange policies are people who would build their family mansion in the middle of a swamp,” President Tinubu said.
The CBN under Godwin Emefiele, which he described as “a den of malfeasance,” ran multiple exchange rates that put the naira in danger of speculation and round-tripping, while also exposing it to other vulnerabilities.
Yemi Cardoso, the new central bank chief, has promised to run an evidence-based monetary system, sanitise the system and enforce discipline.
Nigeria is in a drive to clear an overhang of $6.8 billion obligations, which has spooked the naira, stifled activity in the foreign exchange market, and staunched the flow of the much-needed dollar supply the market needs to trade seamlessly.
The Central Bank of Nigeria has a duty to address that urgency immediately to regain confidence, Mr Cardoso told the Senate on Tuesday at his screening.
Afrexim Bank is engaging oil traders on behalf of the Nigerian government to finance a $3 billion loan that will help strengthen the naira.
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