Again, CBN devalues naira amid Covid-19 economic challenges
- Amid the growing fiscal challenges, Nigeria's apex bank has again devalued the national currency, naira
- Economic experts such as Sanusi, however, condemned the move, saying it will fuel speculation and worsen the fortune of the naira
- Nevertheless, Kingsley Moghalu, said the CBN's move will provide the “level playing field” required for inclusive growth
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The Central Bank of Nigeria (CBN) has again devalued the naira as the country faces tough fiscal challenges.
According to The Guardian, the current devaluation is coming three months after the currency was devalued by 24.6%.
The newspaper notes that the CBN's decision at the time has worsened the inflationary pressure and interest rate.
Citing a Bloomberg report, the paper adds that the CBN raised the rate at the Secondary Market Intervention Sales (SMIS), a window where importers access foreign currencies, from N360/$1 to N380/$1 with an instruction to bidders to comply accordingly.
Source: UGC
Legit.ng gathers that a source at the CBN also dismissed the allegations that the bank was pressured to devalue the naira by the IMF and the World Bank.
The source who asked not to be named said the timing of the devaluation was just coincidental with the demands of the two international financial institutions.
Experts, however, disagree on the devaluation which is also described as exchange rate unification.
Former CBN governor Sanusi Lamido Sanusi said the devaluation would fuel speculation and worsen the fortune of the naira.
Also, Godwin Owoh, a professor of applied economics, said rate unification and devaluation are rooted in the corrupt practices and market manipulation that have destroyed the naira over time.
Owoh said a detailed structural audit of the management of the market is more important than rate harmonisation.
He also called on the government to embark on a holistic “currency and lifestyle audit” as necessary measures to save the naira from continuous depreciation.
Similarly, Abiodun Keripe, head of Investment Research at Afrinvest Securities, said the latest devaluation would trigger a higher inflation rate.
However, Kingsley Moghalu, a professor of International Business and public policy at the Tufts University Fletcher School of Law and Diplomacy, United States, said “rate unification” would provide the “level playing field” required for inclusive growth.
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Meanwhile, Legit.ng earlier reported that the finance minister, Zainab Ahmed, had said Nigeria’s economy will go into a recession based on the current assessment by the Nigeria Bureau of Statistics (NBS).
Ahmed told journalists shortly after the national economic council meeting in Abuja on Thursday, May 21, that the current data shows that the economy would go into a recession at an average of -4.4 per %.
“The National Bureau of Statistics (NBS) has made an assessment. So, it is the NBS assessment that Nigeria will go into a recession measuring at an average of -4.4%," she said.
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Source: Legit.ng
