By Anthony Oliwe

Godwin Emefiele

THE ongoing crisis in the management of Nigeria’s exchange rate is nothing but unending. Apart from massive corruption which has giving room to huge foreign capital flight from the economy, the exchange rate-shocks could more be attributed to the volatility presently rocking the global fall in oil revenues, which no doubt, accounts for the country’s 80 per cent source of income.



The neglect of the agricultural sector, the mining sector, poor infrastructure development among others has not helped matters either. Presently, N199 exchanges for as low as $1 at the official market rate while it sells for N220 to $1 at the unofficial market rate



This has, in no small measures, affected the country’s dwindling external reserves that has plummeted over the period to a mere $30.62 billion as against $60 billion in 2008 when the exchange rate was put at N116 to the $1.

Determined to give the nation a way forward, it appears the nation’s apex bank—the Central Bank of Nigeria recently woke up from its slumber to arrest the ugly situation and if possible, reposition the country’s Forex regime mechanism.

As at moment, the CBN sees a much stronger naira even as it applauds the commercial banks’ rejection of Forex deposits, the apex bank is currently beaming more light on Bureau de Charge otherwise known as BDCs.

Speaking at a recent forum in Abuja, the CBN Director of Monetary Policy, Moses Tule said that the apex bank was upbeat about the naira finding its true value within the shortest possible time and strongly supports the latest decision by banks to stop further receipts of foreign exchange cash deposits from customers to reduce huge idle cash in their vaults.

Tule insisted that there was no going back on the new FX policies since recent developments showed that the naira, which was almost heading to N250 to $1 was only artificially driven by speculators to make more gains stressing that the apex bank would beam more light on Bureau de Change where naira speculation had thrived. “We are going to take the foreign exchange policy far because the government supports what the CBN is doing in this respect, we did not direct the banks to stop accepting dollar cash deposits from customers, but we supported what they are doing.”

Delivering a paper titled: “Exchange Rate Management: Evolution of the Nigerian Foreign Exchange Market’’ at the last seminar for financial journalists in Calabar, the Chief executive Officer (CEO), Financial Derivatives Company Ltd, Bismarck Rewane traced the history of exchange rate regimes from one era to the other. “1821-1914, Classical Gold Standard, where worlds currencies were redeemable in gold, 1915-1925, was the era of WW1 ‘Dirty Float’, 1926-1931, came the Interwar Gold-Exchange Standard, 1932-194, was Pre-Bretton woods floats even as the period from 1945-1971 witnessed the times of the Bretton Woods Agreement and the Age of the Adjustable Peg.”

According to him, from 1972-1973 saw the Smithsonian Agreement, 1974-1979 came with the Floats in the west & Adjustable Pegs in the Developing World, while from 1980-the present day came the European Exchange Rate Mechanism, Euro system.

Rewane explained without equivocations that the determinants of the value of a nation’s currency includes, inflation differential, interest rate differentials, exports of goods and services, terms of trade, current account deficit as well as the tax haven status among others.

Also highlighting the history of the Nigerian foreign exchange market from 1960-1986 Rewane noted: ‘’Between 1960-1980, Nigeria shifted from a fixed regime to a pegged arrangement, then in pre-1973, Nigerian currency was not a traded currency, it was subject to administrative management, exchange rate was largely passive and dictated by the fortunes of the GBP or USD where the naira was pegged to GBP until 1967 when the pound was similar

Source:http://www.nairausd.com/2015/09/cbns-push-for-better-exchange-rate.html?m=1

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I wish 1naira can equal 1 dollar