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Nigerian vice president says current naira exchange rate ‘artificially low’ – Economics Bitcoin News

Nigerian Vice President Yemi Osinbajo recently warned that the country’s official naira exchange rate is artificially low at N411 for every dollar. According to Osinbajo this exchange rate discourages the entry of foreign currency into the country.

Naira exchange rate should reflect market realities

As a result, Vice President Osinbajo says he wants the Central Bank of Nigeria (CBN) to allow Naira to “reflect market realities”. According to a report by The Cable Details, Osinbajo also wants CBN to rethink its forex management strategy. he explained:

We cannot bring new dollars into systems where the exchange rate is artificially low. And everyone knows how much our reserves can grow. I believe that the demand management strategy currently being followed by CBN needs to be reconsidered, and this is just my view.

Nevertheless, Osinbajo suggested that any such re-evaluation should be done only when the CBN governor has had time to address the issue.

naira depreciation

Since the first half of 2020, the naira has consistently depreciated against major currencies such as the US dollar and the British pound. At the time of writing, the official Naira to USD exchange rate is just over 411 for every dollar. This exchange rate is about 40% lower than the parallel market rate of 570 naira for every dollar.

Despite this discrepancy between the official rate and the black market exchange rate for the naira, the CBN has so far refused to devalue the currency. Instead, the central bank is chasing individuals and companies that are accused of fueling Naira’s slide.

Meanwhile, Osinbajo warned CBN against interfering with the financial part of the economy. However, should the need for such intervention arise, CBN should only act if it has “the full cooperation and consent of the Ministry of Industry”, Osinbajo determined.

Do you agree with Naira’s sentiments of the Vice President? Tell us what you think in the comment section below.

image credit: Shutterstock, Pixabay, WikiCommons

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