…By Lola Smith for TDPel Media.
Former presidential aide, Reno Omokri, has provided further insights into the momentary policy recently implemented by the administration led by President Bola Tinubu.
The new management of the Central Bank of Nigeria (CBN) has adopted a clean float foreign exchange management, a move that was previously considered unlikely.
Changes in the Nigerian Foreign Exchange Market
The apex bank, through a press statement signed by Angela Sere-Ejembi, the director in charge of financial markets, announced immediate alterations to the operations in the Nigerian Foreign Exchange (FX) market.
This shift means that the Nigerian Naira exchange rate will now be determined by market forces.
The Impact of Floating the Naira
Omokri took to his Instagram account to elaborate on the policy.
He explained that floating the naira implies that the government will no longer control its rate.
Instead, the rate will be determined solely by market forces. This adjustment brings consequences for the value of the Naira depending on consumer behavior.
Consumer Choice and Naira Stability
Omokri highlighted that if citizens opt to purchase foreign goods, such as those allegedly sold at Peter Obi’s Next Cash and Carry store, the Naira’s value would decline.
Conversely, if there is a preference for Nigerian goods and services, like Innoson Motors and Globacom telecommunications products, the Naira’s value would increase.
Immediate Implications and Consequences
The immediate impact of this policy change is expected to bolster the country’s foreign and local reserves since the Central Bank of Nigeria will no longer need to defend the Naira by injecting unnecessary amounts of foreign currency into the forex market.
Moreover, various stakeholders, including exporters, importers, students, pilgrims, tourists, and health tourists, will no longer have to seek allocations from the CBN, as the previous CBN rate will no longer exist.
Instead, there will be a single exchange rate.
Restoring Naira Convertibility and Travel
Furthermore, with the implementation of this policy, individuals will be able to travel with Naira and exchange it for foreign currencies like Dollars, Pounds, Euros, Yuan, etc., abroad.
This change harkens back to the period of the 70s and early 80s before President Buhari’s coup against President Shagari’s government when such flexibility was available.
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