Nigeria’s President, Bola Tinubu, has expressed disagreement with the Economic Intelligence Unit’s (EIU) prediction of a return to a managed control exchange rate system. The analytical firm predicted on Friday a return to a Central Bank of Nigeria (CBN)-controlled exchange rate due to the intense pressure the Nigerian currency, the naira, has faced since the president announced a switch to a floating exchange rate.
The firm also based its prediction on the CBN’s lack of experience in managing a floating exchange rate system.
However, Tinubu said after he was sworn in as president that his objective in adopting a floating exchange rate system was two-fold: first, to enable the naira to determine its actual value, and second, to narrow the gap between the official and parallel market rates, as well as curb profiteering by foreign exchange speculators.
Read also: Expect a return to a CBN-controlled exchange rate system – EIU
Reaffirming his stance over his decision, President Tinubu insisted that the decision to float the naira was one he was ready to stick to. A situation that seems very challenging despite the terrible impact the falling rate of the naira is having on the living conditions of most Nigerians.
Presently, the naira trades above N810 to a US dollar in the parallel market, marking the sharpest fall since the country moved away from the British Pound Sterling in the 1970s.
In his nationwide address on Monday, the president said, “Also, the multiple exchange rate system that had been established became nothing but a highway of currency speculation. It diverted money that should have been used to create jobs, build factories, and businesses for millions of people. Our national wealth was doled out on favourable terms to a handful of people who have been made filthy rich simply by moving money from one hand to another. This, too, was extremely unfair.
“It also compounded the threat that the illicit and mass accumulation of money posed to the future of our democratic system and its economy.
“I had promised to reform the economy for the long-term good by fighting the major imbalances that had plagued our economy. Ending the subsidy and the preferential exchange rate system were key to this fight. This fight is to define the fate and future of our nation. Much is in the balance.
“Thus, the defects in our economy immensely profited a tiny elite, the elite of the elite, you might call them. As we moved to fight the flaws in the economy, the people who grow rich from them, predictably, will fight back through every means necessary.“
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