CBN Disagrees With World Bank, IMF on Forex Policies, Details Various Policies Since 2015 to Save Naira

CBN Disagrees With World Bank, IMF on Forex Policies, Details Various Policies Since 2015 to Save Naira

  • The Central Bank of Nigeria has defended its policies, claiming they are working and that everything will be fine soon
  • The International Monetary Fund, or World Bank, has consistently criticized the Nigerian government's various foreign exchange policies
  • Despite the criticism, the CBN is adamant about its policies, reminding the global institutions of several steps taken to help the Naira since 2015

Godwin Emefiele, governor of CBN at the ongoing 2022 Spring Meetings of the International Monetary Fund/World Bank Group has defended Nigeria's forex policies.

The assurance is coming after the global institutions intensified pressure on the country to embark on sweeping foreign exchange reforms, including adopting a market-led management approach.

According to Emefiele, IMF and World Bank are development partners and their advice is important but what Nigeria needs is homegrown solutions.

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CBN, World Bank, IMF, Exchange Policy, Naira
MF Managing Director Kristalina Georgieva (L) speaks at a press briefing with World Bank Group President David Malpass. Credit: Nicholas Kamm/AFP
Source: Getty Images

The Guardian reports Emefiele insisted Nigeria cannot bear the repercussion of floating the naira completely which tends to give value due to supply and market expectations.

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He noted:

"What that means is that we cannot go on with what is proposed as a free float of the currency, as long as demand surpasses supply.”

David Malpass, the president of the World Bank had raised concerns about Nigeria’s exchange rate policies which include having several exchange rates and putting the Naira exchange rate at a constant level.

Emefiele defends policies

Emefiele replied that CBN cannot be accused of not adjusting the country’s currency, noting that the official exchange rate had been adjusted from N155 per dollar in 2015 to N420/$.

He added:

"We have been at this since 1986 and that is why we are saying that whereas we are also doing something to adjust the currency; for instance, between 2015 and now, you will observe that we have adjusted the currency from N155 to about N410, N420 that it is today.

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“We cannot be accused of not adjusting the currency. We are trying to adopt a very gradual approach towards adjusting the price to the level that it is today. But at the same time we have to be given the chance to also look at while you are adjusting the price, you must also do something about demand and supply.
“That is the reason we are saying we need to do something on demand to make sure that those things we can produce in the country, we restrict access to FX for them so that we encourage people to produce locally."

Emefiele is optimistic when that happens, demand for FX will reduce and when it reduces, ultimately the price will not rise beyond Nigerians.

Naira drops massively to US dollar

On Thursday, April 21, 2022, Data from FMDQ securities where Naira is officially traded by investors and exporters shows Nigeria's currency dropped significantly in value to N419.50/$ compared to N418.33 It exchanged on Wednesday.

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The closing rate on Thursday is the lowest level Naira has exchanged at the official market since January 5, 2022.

Naira to crash to N600 per dollar this season as e-Naira app’s massive downloads continue

Meanwhile, Legit.ng has reported that while the e-Naira is seeing massive and impressive downloads, the actual Naira is eroding in the official market.

On Monday, December 6, the actual Naira closed at N415 at the official Investors and Exports window.

The eNaira has seen commendable adoption after it was launched in October this year. But experts are not sure if those downloading the app are using it or keeping it for future use or for fun.

Source: Legit.ng

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