Following the development, the naira depreciated to N664.04/dollar at the close of trading at the I&E Window on Wednesday, according to data from the FMDQ Securities Exchange.
Reacting to this, a facilitator with the Nigeria Economic Summit Group, Dr Ikenna Nwaosu, kicked against the unification of the exchange rates adding that there should be at least two rates, one for commercial and one for education.“It brings a lot of clarity to forex as against the multiple forex windows under the former regime. The last regime under the suspended CBN governor had almost 12 forex windows.
Oyedele also noted that there might be an increase in debt to Gross Domestic Product ratio by about five per cent, alongside an increase in foreign debt service cost. Oyedele also said that the development would lead to cost savings and attract foreign exchange inflows, adding that the capital market will benefit from this, among other benefits.
“It doesn’t require such a complicated economic analysis to show that we had engaged in self-destruction for a long time. If you want to be among the top 20 economies of the world, you can’t have that kind of situation where two exchange rates are miles apart.” “It’s good news for us because exporters will now be able to get the correct rate for their proceeds based on their forex earnings. Before, if you export through official channels, whatever comes back to you, they exchange at the official rate, which is a disincentive to exports. It is a disincentive because the person who is exporting his goods, some of his inputs are also imported and there is not enough forex available for you and have to source for it at the parallel market.
Rewane said, “All you have to do is look around at countries that are floating exchange rates. If you check properly, those with floated exchange rates tend to attract international investors. They seem to have a better economic performance. I’m not saying that the fact that you have floated your exchange rate necessarily means you will achieve everything you want. But if you don’t float your exchange, you are likely to lose a lot of benefits that come to open markets.
The CPPE noted that the policy is not a devaluation policy, but a pricing mechanism that reflects the demand and supply fundamentals in the foreign exchange market.
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