The flexible exchange rate policy the Central Bank of Nigeria (CBN) announced on Wednesday has received massive support. It is due to go into effect on Monday.
The Naira and trading at the Nigeria Stock Exchange (NSE) firmed up yesterday in response to the policy.
The International Monetary Fund (IMF), the European Union (EU) delegation to Nigeria and the Lagos Chamber of Commerce & Industry (LCCI), among others, hailed the policy.
Lagos lawyer Olisa Agbakoba (SAN) supported the policy which he believes will bring naira back to its deserved value in addition to making foreign exchange available for those who need it.
IMF spokesman Gerry Rice told a weekly news briefing that the Fund wanted to see how effectively the naira exchange market functions once the new float system becomes effective.
“I think the announcement yesterday to revise the guidelines for the operation of the Nigerian interbank foreign exchange market is an important and welcome step,” Rice told reporters.
“It will provide greater flexibility in that market, the foreign exchange market.
“As we have said before, a significant macroeconomic adjustment that Nigeria urgently needs to eliminate existing imbalances and support the competitiveness of the economy is best achieved through a credible package of policies involving fiscal discipline, monetary tightening, a flexible exchange rate regime and structural reform,” Rice said, adding that allowing the exchange rate to better reflect market forces is an integral part of that.”
Others who applauded the move by CBN including the Director General of LCCI, Muda Yusuf, Head of Trade and Economics at the EU delegation to Nigeria and West Africa, Mr. Fillippo Amat, and former Nigeria Bar Association (NBA) president, Agbakoba (SAN), said the new policy will boost investor's confidence thus attract huge investments into the economy. The policy will also enhance the supply of forex to the market from capital importation, export proceeds and diaspora remittances.
CBN Governor, Godwin Emefiele has said the bank expects the naira to settle at around N250 to the dollar after it abandoning the peg of N197 to the dollar it has supported for 16 months.
