The Central Bank of Nigeria should dump the merger of parallel and official exchange rates, according to a former Deputy Governor of the CBN, Dr. Tunde Lemo.
According to The Punch, he claimed that the naira is not an internationally convertible currency and that the central bank need not be concerned about a shortfall of up to N50.
This information was revealed by Lemo in a recent presentation he presented at the Lagos Business School.
He praised the administration for having the courage to consolidate the rates and said that the discrepancy had created enormous arbitrage opportunities.
He remarked, “Unfortunately, liquidity has dried up due to dollar scarcity, oil theft, reserve level, prior CBN actions (too many restrictions), outstanding trades in commodities, capital control, overdue swaps, etc.”
He said, “Since the naira cannot be converted into other currencies, I suggest that policymakers abandon the idea of combining the two rates. The CBN should not be concerned about a disparity of more than N50.”
He added that certain of the government’s monetary policies might have some flaws.
Lemo said, “Low-interest rates: This is extremely good to wish for, but tough to deliver in a high and growing inflation climate. Because of monetary and structural considerations, interest rates are high, and until we control inflation and address structural issues, cheap interest cannot be supplied.
The former CBN deputy governor demanded that government expenses in the nation be cut as he claimed that the Federal Government is providing a poor example by holding the largest federal cabinet in 24 years.
He praised the government’s decision to scale back its representation to the UN General Assembly and noted that much more was needed from the top.
He also presented a bleak image of Nigeria’s economy, urging swift measures to stop and reverse the troubling decline before things get out of hand.