Vice President Yemi Osinbajo has clarified the views he canvassed on naira exchange rate during the two-day retreat held by the federal government in Abuja.
Mr Osinbajo had made a presentation on the Economic Sustainability Plan (ESP) on Monday at the ministerial retreat at the State House Banquet Hall.
Naira currently trades at N414 at the official market against the U.S. dollar, and N570 at the parallel market.
“As for the exchange rate, I think we need to move our rates to [be] as reflective of the market as possible. This, in my own respective view, is the only way to improve supply,” the vice president said.
“We can’t get new dollars into the system, where the exchange rate is artificially low. And everyone knows how much our reserves can grow. I’m convinced that the demand management strategy currently being adopted by the CBN needs a rethink, and that is just my view.
“Anyway, all those are issues that when the CBN governor has time to address, he will be able to address in full.”
He also lamented the lack of access to forex for the importation of systems and raw materials as one of the contributory factors of the current economic situation.
But in a statement on Tuesday, the media aide to the vice president, Laolu Akande, said he (Osinbajo) did not call for the devaluation of the Naira.
Mr Akande said the vice president advocated a forex policy that would curb arbitrage and corruption, offering Nigerians cheaper dollars.
“Our attention has been drawn to statements and reports in the media mis characterising as a call for devaluation, the view of the vice president that the Naira exchange rate was being kept artificially low.
“Osinbajo is not calling for the devaluation of the Naira; he has at all times argued against a willy-nilly devaluation of the Naira.
“For context, the vice president’s point was that currently the Naira exchange rate benefits only those who are able to obtain the dollar at N410, some of whom simply turn round and sell to the parallel market at N570.
“It is stopping this huge arbitrage of over N160 per dollar that the vice president was talking about; such a massive difference discourages doing proper business, when selling the dollar can bring in 40 per cent profit,” he said.
Mr Akande said the vice president called for measures that would increase the supply of foreign exchange in the market rather than simply managing demand which opened up irresistible opportunities for arbitrage and corruption.
“It is a well-known fact that foreign investors and exporters have been complaining that they could not bring foreign exchange in at N410 and then have to purchase foreign exchange in the parallel market at N570 to meet their various needs on account of unavailability of foreign exchange.
“Only a more market reflective exchange rate would ameliorate this; with an increase in the supply of dollars, the rates will drop and the value of the Naira will improve.
“The real issue confronting the economy on this matter is how to improve the supply of foreign exchange, but this will not happen if we do not allow mechanisms like the importers and exporters window to work.
“If we allow this market mechanism to work as intended, we will find that the Naira will appreciate against the dollar as we restore confidence in the system,’’ he said.
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