• Thursday, May 30, 2024
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BusinessDay

CBN’s rush to stabilise naira is ineffective, says Peterside

Atedo Peterside, the founder of Stanbic IBTC Bank plc, has said that Nigeria’s Central Bank’s rush to stabilise the naira through dollar sales to Bureau De Change operators will not work.

In an exclusive interview with Channels, he stated that the naira’s recent depreciation to N1500/$ is normal and expected.

“The exchange rate problem was inherited from the previous government, and what they’ve been doing is to manage it. Initially, I would have thought, first, get some stability around N1,300-N1,400/$, and not be in a hurry to appreciate the exchange rate, by selling dollars to BDCs at N1100/$,” he said.

Read also: CBN to sell $15.88m to BDCs at N1,101/$ as dollar firepower grows

“Those guys just turned around and sold it two weeks later for N1,400/$. It’s better to have stability that can be sustained. The N1,500/$ level seems to be the natural level that can be sustained. Keep it there for a while, let confidence build.”

The naira, Thursday, depreciated to a low of N1533.99/$ at the Nigerian Autonomous Foreign Exchange Market, according to data from FMDQ.

This represents a 5 percent slide from the rates quoted at N1,459.02/$ yesterday in the official market.

Peterside stated that the naira’s depreciation to N1,500/$ is a sustainable level that the CBN ought to maintain.

“When experts speculated that the naira would stabilise at N700/$, I told them they were joking. They were not looking at the quantity of naira, the previous government printed. I expected the market to stabilise around N1500/$,” he said.

He further recommended that the federal government stick to boosting investors’ confidence by aligning their actions with the policies enacted, noting that when they deviate, investors are frightened away.

“What investors are looking for before ploughing their resources to reactivate the economy, is policy consistency. The government showing them that they are doing all the right things, putting in place the right policies, and the right coordination between fiscal and monetary policies.”

“Stop doing things that frighten investors like throwing money at hajj or buying luxury SUVs. Perhaps we can then move after the external reserves start rising. There’s a huge naira overhang, chasing a few dollars. FG needs to start doing all the right things,” he stated.