By Adedapo Adesanya
The Central Bank of Nigeria (CBN) has said it will not completely float the Naira in the foreign exchange (FX) market, stating that it adopt the managed floating exchange rate system so as to have a bit of control of the exchange rate in the country, a report by Bloomberg says.
Mr Kingsley Obiora, a deputy governor of the apex bank, told the publication in an interview in Rabat, Morocco.
This is as it continued to float its currency which was initially announced last week and has sent the local currency spiralling to a new low of N770 per Dollar at the Investors and Exporters (I&E) FX Market on Monday evening.
“We are allowing the market itself to set a price,” Mr Obiora reportedly said.
“There is no country in the world, even the US, that has a completely free float,” he added.
The central bank will continue to pursue a managed float, he further said.
Mr Obiora expects that the supply of foreign exchange will eventually be unlocked once the price of the Dollar reaches a fair level that both buyers and sellers consider.
He warned that it may be too early to determine if the Naira’s exchange rate to the Dollar has bottomed out.
He also pointed to an analysis done by the International Monetary Fund (IMF) and international banks like Goldman Sachs, which correctly suggested that the local currency should not be as weak as the parallel market indicated.
He lauded the recent moves by President Bola Tinubu, saying that the removal of fuel subsidies, along with the convergence of the exchange rates, will drive economic growth.
He said Nigerians can expect this from next year when the policies start making an impact.
“I completely expect us to do 5 per cent to 6 per cent growth next year,” he said. “Over the next four years, you may see the GDP approach something like $600 billion to $700 billion,” he said.
Dipo Olowookere