Ex-CBN Deputy Governor Warns Tinubu Against Making Naira Stronger as Banks Sell One Dollar for N765

Ex-CBN Deputy Governor Warns Tinubu Against Making Naira Stronger as Banks Sell One Dollar for N765

  • A former deputy governor of the Central Bank of Nigeria, Kingsley Moghalu, has praised the ongoing economic reforms of President Bola Tinubu
  • He believes that trade reforms will enhance competitiveness and productivity, thereby attracting foreign investments
  • Moghalu, however, sent a note of warning about making the naira a stronger currency against the dollar and other foreign currencies

Professor Kingsley Moghalu, a former deputy governor of the Central Bank of Nigeria (CBN), has explained the implications of making the naira too strong against foreign currencies.

Moghalu, while speaking on Arise TV on Thursday, June 22, 2023, said there must be a balance, as a stronger naira could make Nigeria import dependent.

On Thursday, FMDQ data shows the naira continued its free fall against the US dollar, losing N1.76 or 0.26% of its value to close at N765.13/$1, in contrast to Wednesday's rate of N763.17/$1.

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Naira to dollar exchange rate
Kingsley Moghalu wants trade reforms to go alongside forex reforms Photo credit: @MoghaluKingsley
Source: UGC

He explained further that a stronger currency would make importation cheaper and could affect competition between local and foreign products.

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Moghalu seeks trade reforms

The former CBN top director also stressed the need for the administration of President Bola Ahmed Tinubu to embark on trade reforms.

According to him, the trade reforms will make Nigeria’s economy competitive and more productive.

The former presidential aspirant added that there are no foreign exchange reforms without trade reforms, citing how China devalued its currency to create a productive economy.

His words:

"I believe the reforms are moving in the right direction; however, there must be a human face.
"We have this fixation on having a strong naira. Having a strong naira when you are not a productive economy, all it does is that it makes you an import-dependent economy. Because having a strong naira makes your import cheaper.

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"Economies that are productive, actually, sometimes engage in competitive devaluation. China does this, so that their goods are cheaper for foreigners to buy, and therefore, they get more money into their country, rather than wanting their currency to be very strong.
"We should be very careful about what the goal is. The economy is there to serve the people, unless businesses will simply make a profit while the people suffer."

Naira bounces back as dollar exchanges same rate in official, black FX markets

Meanwhile, in another report, the naira to the dollar exchange rate at the official and black markets met for the first time in eight years and closed at N756.

This followed the recent foreign exchange reforms the Central Bank of Nigeria (CBN) embarked upon.

Kingsley Obiora, the CBN’s deputy governor, further explained Nigeria's ongoing operational reforms in foreign exchange markets.

Source: Legit.ng

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