Ex-Stanbic IBTC Boss Explains Reasons Naira is Falling Despite CBN’s Interventions, Gives Solutions
- The founder of Stanbic IBTC has faulted the current CBN's strategy of saving the naira against the dollar
- Atedo Peterside said the CBN will need to work on stabilising the reserve and stabilising the naira value to a reasonable level
- This occurred as the naira plunged on Thursday, May 15, reaching its lowest in the month and raising concern for Nigerians
Legit.ng journalist Zainab Iwayemi has over 3-year-experience covering the Economy, Technology, and Capital Market
Atedo Peterside, the founder of Stanbic IBTC and the ANAP Foundation, claims that the President Bola Tinubu-led administration's pressing desire for the naira to strengthen against the dollar and other foreign currencies is not the best strategy for doing so.
Source: Getty Images
Speaking on Channels Television's Politics Today on Thursday, Peterside said trying to strengthen the currency quickly will not succeed.
He opined that the ideal course of action would be for the central bank to steadily increase the reserve while stabilising the value of the naira to a point where they could support it for a while.
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Peterside said:
“I will be fair to this government, they inherited the exchange rate problem and what they have been doing is trying to manage it. Recently I would have thought, let’s get some stability around N1,300 or N1,400, don’t be in a hurry to appreciate the exchange rate.
“Going to sell dollar to bureau de change at N1,000, N1,050, those guys will turn round two weeks later and sell it at N1,400, N1,500 and they go away laughing. What’s the point for that?
“It’s better to have some stability they can sustain, keep between N1,300 and N1,300 which looks to be the natural equilibrium band today, keep it there for a while, build up your reserve to let confidence come back. So stop trying to appreciate the naira in a hurry, it’s not going to work.”
Additionally, Peterside suggested that the government quit its careless spending, which would make them appear irresponsible, and start acting appropriately to win over investors.
He claims that the government won't accomplish anything concrete by following the pattern of doing five things correctly and two things incorrectly.
The economist stated that while Tinubu's monetary policy is on the right track, the extreme fiscal irresponsibility that occasionally emanates from the top is on the wrong track.
How the naira has fared
After plunging to over 1,900 to the dollar, the naira gained strength and was recently named the world's best-performing currency, trading at about 1,100.
Meanwhile, the naira recently dropped again to more than N1,500 to the dollar in the unofficial market.
Earlier, the exchange rate between the naira and dollar in the official Nigerian Autonomous Foreign Exchange Market (NAFEM) depreciated to N1,533.99 per dollar on Thursday, May 26, 2024, as per recent report.
CBN names factors driving dollar supply
Legit.ng previously reported that in the nine months from January to September 2023, the Central Bank of Nigeria's dollar supply for overseas medical and educational costs increased by 49.22% to $1.81 billion.
According to CBN data, Nigeria spent somewhat more on international education and health-related concerns abroad in 2023—$1.81 billion compared to $1.76 billion spent at the same time in 2022.
The amount allocated for these two charges was insignificant compared to the $2.49 billion available during the same period in 2021.
Proofreading by James Ojo Adakole, journalist and copy editor at Legit.ng.
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