By Omodele Adigun
As the foreign exchange (forex) rates gradually converge at N360/$, the Central Bank of Nigeria (CBN) has assured Nigerians that the country would never go back to the era of N500/$ again.
Its Deputy Governor in charge of Financial System Stability, Dr. Joseph Nnanna, gave the assurance Saturday in Lagos after he was conferred with the honorary Fellowship of the Chartered Institute of Bankers (FCIB) of Nigeria.
According to him, the apex bank has achieved stability, which is not going to be a flash in the pan, as the much-anticipated convergence of the various exchange rates is happening at the forex market. Nnanna was, however, full of praises for the policymakers who made this to happen.
His words: “Our exchange rates are converging. We are getting southward. In IMF, they talk about the need to have one rate. The one rate can happen organically or inorganically. For us at the CBN, we believe that organic convergence is the way to go. Inorganic convergence, which is forced, will always produce an arbitrage which we don’t want.
Before, we have bought forex for almost N500/$. Today, it has come down through combination of extraordinary policies. We didn’t force it down. It came down organically or naturally, and that’s the way it supposed to be. The rate will not go up, take it from me. We have achieved stability and the stability is here to stay.”
On how long could the CBN maintain the feat, Nnanna stated that capacity is within the ambit of the apex bank:
“The sustainability is already evident; the reserve is growing. As I speak, it is $34billion. When we had volatility, the reserve was as low as $20billion. Then there was problem. But now, there is no problem. All we need to do is to manage the economy and manage it properly .”
In his keynote address, the CIBN President, Professor ’Segun Ajibola noted that forex management remains a key enabler as Nigeria strives to improve on the citizens’ Human Development Index, adjudged to be below the international minimum standard. He stated the only way out is for Nigerians to curb their insatiable desire for imports.
His words: “With over-reliance on imports of basic needs and export of mono-product, oil, the challenge of absolute and relative poverty remains very much with us. What more, we are, as a people, still exposed to the vagaries of the foreign exchange market.
Once again, it should be reaffirmed that the macro-economic objective of exchange rate stability and equilibrium balance of payments position can be achieved if only we tame our high propensity to consume imported consumer durables and non-durables, promote non-oil exports and pursue the age-long import substitution strategies.”