Experts kick as Osinbajo seeks play of market forces
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By Peter Egwuatu, Yinka Kolawole, Johnbosco Agbakwuru & Nkiruka Nnorom
Against the backdrop of the recent exchange rate crises, the Vice-President, Professor Yemi Osinbajo, has advocated allowing market forces to determine value of the Naira.
However, experts believe the devaluation of the Naira is unnecessary now. They argued that the effective exchange rate even by IMF standard is between 435 to 440 stating that the over valuation is less than 5%.
But speaking at the mid-term retreat on President Muhammadu Buhari’s second tenure, the vice-president said the exchange rate is artificially low, and this is deterring investors from bringing foreign exchange into the country.
“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,” Osinbajo said.
He added: “We can’t get new dollars into the system, where the exchange rate is artificially low. And everyone knows by 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.”
The naira is changing for a dollar at N411 at the official side of the market, while the same goes for N565 to the US currency at the parallel market as at yesterday.
CBN competing with ministries
Osinbajo suggested that the CBN is competing with the fiscal side of the economy, which includes ministries, departments, and agencies of government.
“There must be synergy between the fiscal and the monetary authorities. We must be able to deal with the synergy, we must handle the synergy between the monetary authority, the CBN, and the fiscal side.
“Sometimes, it appears that there is competition, especially on the fiscal side. If you look at some of the interventions, you will find that those interventions are interventions that should be managed by ministries.
“The Ministry of Industry, Trade and Investment should handle MSMEs (micro, small and medium enterprises) interventions, and we should know what the CBN is doing. In other words, if the CBN is intervening in the MSME sector, it should be with the full cooperation and consent of the Ministry of Industry.
“Sometimes you will get people who are benefiting more than once because we simply have no line of sight on what is going on, on one side.”
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