Ex-CBN Deputy Governor Speaks on Exchange Rate Returning to N400/$ After Massive Gain in One Week
- Kingsley Moghalu, a former CBN deputy governor, replied those who want the naira to sell for N400/$
- He said that Emefiele’s era only created an artificial value of the currency to please economic illiterates in political power
- He said that the fair value of the naira is N900-N1200 to a dollar, which reflects the original value of the naira
Legit.ng journalist Zainab Iwayemi has over three years of experience covering the Economy, Technology, and Capital Market.
Former deputy governor of the Central Bank of Nigeria, Kingsley Moghalu, has provided a response to those wishing for the naira to sell for N400 to the dollar.
Source: UGC
In an X post, Moghalu said that the return to the amount would be a fantasy as the naira does not have any basis for such.
He said this after the naira appreciated against the US dollar for last week, crediting CBN’s efforts to close at N1,431/$ on Friday, March 22, as cited by FMDQ data.
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Weighing on the development, Moghalu said:
“Even discounting for the negative impact of speculative attacks on the value of the naira, the exchange rate will (and should) reflect its market value in reality, not the artificiality that the Emefiele era central bank sought to maintain to please economic illiterates in political power at the time.”
He maintained that the economy was bled by speculators' huge arbitrage, which was made possible by artificiality.
He said:
“Nigeria does not (yet) have a productive export economy. That’s the heart of the matter and we do not have $100 billion in foreign reserves. So, on what basis would the naira forex rate return to some fantasy land soon?”
According to Moghalu, it will take time to fully restore or attain investor confidence.
Forex beyond oil
Moghalu stated that it would be best if the government concentrated on gradually building an export manufacturing sector with value addition that generates foreign exchange earnings that go beyond oil.
He stated that the key to the issue is the electrical dilemma, wherein Nigeria has been producing less than 4,000 megawatts of power for a population of 200 million for several decades.
He stated:
“Take power to even 20K megawatts (let’s not talk of 50K for South Africa’s 60 million population or Brazil’s 181K megawatts for a population only slightly larger than Nigeria) and you will see what the Nigerian entrepreneurial spirit is capable of.”
He said the naira is undervalued currently, but our goal (as a country) should not be for it to be artificially overvalued.
He added:
“If we can get to N900-N1200 to a $ range that would be fair value. I hope CBN‘s efforts continue to bear fruit and gains become sustainable. Stability of the rate is key.”
Moghalu advises FG to get $30bn loan
Legit.ng reported that Moghalu has advocated for the federal government to explore the possibility of obtaining a long-term stabilisation loan from the International Monetary Fund (IMF).
Speaking on 'An Economy In Distress; Which Way Forward?' at the 16th edition of LEADERSHIP Annual Conference and Awards in Abuja, Moghalu emphasised that such a loan from the IMF could potentially drive sustained economic expansion.
Earlier this week, the former presidential candidate predicted that Nigeria's current economic downturn and its consequences will persist for at least three to five years.
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Source: Legit.ng
