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Experts Opinions differ as Vice President Osinbajo says exchange rate is relatively low

Nigerian vice president Yemi Osinbajo,   in Abuja at the opening of a two-day Mid-Term Ministerial Performance Review Retreat organised on monday 11th October to assess progress made towards the achievement of the nine key priorities of the Buhari regime, called for an official exchange rate that is reflective of market reality. He said the current dual exchange rates allowed for arbitrage and blocked inflow/supply of dollars from investors and is deterring investors from bringing foreign exchange into the country.

Experts, however, differed on the vice-president’s opinion. Reacting to this . a professor of capital market at the Nasarawa State University Keffi, Uche Uwaleke, said, the implications of devaluing the naira now were quite scary. He said, “The first casualty will be the 2022 Appropriation Bill. It means the 2022 budget, which is predicated on N410.15 per dollar is dead on arrival.

The Vice President obviously means well. But this statement is capable of triggering panic buying and speculation in the forex market (official and parallel) and further complicating things for the CBN. There is no doubt, devaluation will force down the volume of imports and reduce the pressure in the forex market temporarily. But have we thought of the impact it would have on pump price of fuel and the multiplier effects?

He said the argument that naira devaluation would incentivise foreign investors remained to be seen as other factors such as insecurity equally play a part. The naira, he added, had suffered several devaluations in recent past.

He said, “It has neither solved the fundamental problem of helping to diversify the export base nor curbed unbridled imports. Doing so yet again will not change anything. Rather, it is a recipe for high poverty and unemployment levels.

 

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