An economist, Dr Anthony Aziegbemi, described the Central Bank of Nigeria’s (CBN) latest strategy of strengthening the value of Naira by injecting excess foreign currencies into the market, as an artificial solution.

Aziegbemi said this on Wednesday in Abuja at a round-table on the “Way out of Recession’’, organised by Value Fronteira Limited.



The CBN, in the last two weeks, injected over 1.14 billion dollars through the inter-bank market, to meet legitimate demand of foreign currencies for travels, school fees and medicals.

Through this, the CBN hopes to strengthen the value of Naira and simultaneously crash the demand at the black market segment.

“Right now CBN is pumping so much Forex because it has the money. But once the money dries up, we are back to square one.

“Economics is a social science, thus contains laws that govern how economies should be run.

“If you don’t follow these laws and you do it artificially, like banning of the 41 items from getting foreign exchange, the economy won’t work as expected.

“You need to attack the foundation of the economy. You need to get the manufacturing industry up and moving. That is the only way we will have sustainable progress,’’ he said.

Aziegbemi said that the right way to strengthen the Naira was to invest in critical infrastructure and ensure that the manufacturing and agriculture sector got the necessary support to grow.

In proffering solution out of recession, Aziegbemi called for the downward review of the current monetary policy rate.

He recalled that with obvious signs of recession and rising inflation, instead of lowering the monetary rate, the CBN instead, raised it from 11 per cent to 12 per cent and later to 14 per cent.

He said that countries that successfully came out of recession had lowered their monetary policy rates during such trying times to encourage spending.

He cited the case of China, Ethiopia, India, Malaysia, Poland, Mexico and Turkey that reduced lending rate, increased spending and used fiscal policy to stimulate demand in the face of collapsing global demand.

“The Monetary Policy Committee needs to cut down the monetary policy rate to at least 8 per cent.

“ The cause of inflation is our over dependence on foreign products and not excess liquidity. So raising the lending rate has made less money available in the system and more difficult to drag the economy out of recession.

“What we need to do is to reduce the lending rate rather than tightening people’s hands,’’ he said

Aziegbemi advised the government to continue to pay special attention to agriculture and agric-businesses, work on enhancing the sources of Forex and ensure better fiscal and monetary policy coordination.

He canvassed for amnesty for treasury looters, to allow voluntary return of looted funds and encourage government to commence immediate implementation of projects and programmes that would stimulate the economy.

http://dailypost.ng/2017/03/08/injecting-dollars-forex-market-strengthen-naira-artificial-solution-expert/

dedicate this ftc to all cules out there


may the naira not be like psg

well let's first of all thank GOD that the naira is gradually recording some appreciation.

We already do it Nigeria way. No wonder the country is in total mess from year to year. And the government appears not ready to change Nigeria. This is the truth of the whole matter. We are yet to shift from politics of sentiments to real development. Rather than doing the right thing and fellow step for growth the government will choose to blame recession on the police man at check point. If you are blaming the police what of the army. When you blame the education sector what about Agriculture. When we blame unemployment what about economy, power and Infrastructures. You blame the Niger delta what about fairness and justice. Lack of investors what about good security and industries. We can go on and blame the blame. But unfortunately not everybody in Nigeria is ready to agree and commit in Nigeria nation. A nation without a vision perish. One Ghana Cedi to Naria is like Naria to dollar. You think is oil in Nigeria, how much oil do Ghana or Kanye sell?

It's not a Solution. It's a waste of Sovereign Currency.

For how long will they keep putting dollar into the system? It's not sustainable. We need brains like Okonjo iwuala. But sentiments and pride won't allow.

The dollar being injected into the system is monies made from the daily sales of crude oil, this can continue for as long as crude oil still sell at the International markets plus the increase in output of crude oil.

It can be sustained for as long as crude still sell.


The only problem I forsee is our foreign reserve may not grow rapidly like we've seen recently.

Mr expert, what's your natural solution? Give him small appointment now, he will start stealing with both hands.

The idiat caused the recession and is far away in london dying...

How. Mm

We already know but most Nigerians are myopic and lazy. No one wants to take the hard strides of agricultural activities and exportation to attract Forex. Everyone envies the lavish life styles of Yahoo boys and drug dealers so get rich quick syndrome is the order of the day.

If they think this is the solution, something tells me, that this so called solution will leave a bitter taste in many mouths, in a long term.

Let them pump till dollars falls to 200/$ then we can start importing manufacturing equipments

Hoarders must go back to village at all cost.

It is not sustainable.

K

Single digits currency is the solution.

Painment and discouragment kikikikiki

One bureau de change malam was rushed to the hospital yesterday.... May be it's dollar issue or personal I don't know

nextprince:
Mr expert, what's your natural solution. Give him small appointment now, he will start stealing with both hands.

No mind am, all of them will be forming over-sabi until they get that appointment nd then strt screwing up... expert my black bombom

opalu:
It's only when we the people turn Nigeria from a Consumer nation to a producer nation that the real solution to Naira will be found.
However for now, that temporal solution makes life less hard for the common man.

The author is clueless,we are no china or close to any developed country
The only solution at the moment is to pump dollars
But i still think government need start importing small scales machine and sell it at subsidized rate

I've said it lots of time. Deep pocket speculators will just keep mopping whatever CBN gives to BDC's. Get the economy right; everything falls in place. What happens when foreign reserve is depleted? Pumping dollars can it be sustained?

@Aziegbemi the rookie, we have resources to counter this, if the enabling environment is restored within this time we are good bounce back for real OR are you saying we should fold our arms and do nothing presently till we build roads, manufacturing companies start running etc...?

CROWNWEALTH019:
The idiat caused the recession and is far away in london dying...

Nawa for una! How about d cartel of ministers and perrmanent sec that stole Nigeria dry? So u think buhari is afraid of Nigeria abi? E be like na hunger dey minister to u this morning.

Why is it so hard for the government to ban BDC and create stiff penalties for offenders both from the bank and the BDC operators?

CROWNWEALTH019:
The idiat caused the recession and is far away in london dying...

The question is how can you help nigeria to come out from recession without complaining . What can you produce to reduce foreign demand in your house.

Thanks for your expert advice but for now dollar is falling.