The Central Bank of Nigeria (CBN) has said it cannot be accused of not adjusting the country’s currency.
Godwin Emefiele, governor of CBN, said on Thursday in Washington that the official exchange rate had been adjusted from N155 per dollar in 2015 to N420/$.
Speaking on the sideline of the ongoing 2022 Spring Meetings of the International Monetary Fund/World Bank Group, he said Nigeria is operating a managed float exchange rate regime.
“What that means is that we cannot go on with what is proposed as a free float of the currency,” he said, adding that doing so would make the exchange rate spiral “as long as demand surpasses supply.”
“We have been at this since 1986 and that is why we are saying that whereas we are also doing something to adjust the currency; for instance, between 2015 and now, you will observe that we have adjusted the currency from N155 to about N410, N420 that it is today,” he said.
On the CBN’s website, the exchange rate stood at N416.08/$ as at April 21, 2022. At the Investors and Exporters forex window, the naira depreciated by 0.28 percent as the dollar was quoted at N419.50 on Thursday as against the last close of N418.33 on Wednesday. Most currency dealers maintained bids between N410.00 and N444.00 per dollar.
Emefiele said: “We cannot be accused of not adjusting the currency. We are trying to adopt a very gradual approach towards adjusting the price to the level that it is today. But at the same time we have to be given the chance to also look at while you are adjusting the price, you must also do something about demand and supply.
“That is the reason we are saying we need to do something on demand to make sure that those things we can produce in the country, we restrict access to FX for them so that we encourage people to produce locally. When that happens, demand for FX will reduce and when it reduces, ultimately the price will not rise beyond Nigerians.”
Emefiele affirmed that the apex bank is achieving that goal, saying the CBN had done a lot in intervention in agriculture, as it had stopped the importation of rice and maize.
He said the 650,000-barrels-per-day Dangote refinery coming on stream hopefully by the end of the year would also reduce demand for FX that normally would go for importation of petroleum products.
Emefiele said: “I have always said this: between the importation of refined products alone, and importation of whether it is rice, sugar or wheat, this consumes about 40 percent of FX that is needed to fund imports in Nigeria.
“Right now, no FX for importation of rice or maize; very little amount for wheat. I believe that demand will drop, as demand drops what you will find is that whatever supply we have is able to match the demand and then we can see a stable exchange rate.”