A former Governor of the Central Bank of Nigeria (CBN), Alhaji Sanusi Lamido Sanusi, has thrown his weight behind the steps so far taken by apex bank towards exchange rate unification.
Sanusi, who stated this on Tuesday at a webinar titled, “United States of Naira: What price for unification?” which was hosted by the currency trading solutions firm, AZA.
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The former Emir of Kano said that the CBN should not get into a panic, but wait for oil prices to rise to enable it to build up its foreign exchange buffers.
Sanusi commended the CBN for embarking on exchange rate unification, insisting that the move would curb arbitrage in the forex market in addition to making forex transactions more transparent.
The apex bank has reportedly been under pressure from the World Bank and International Monetary Fund (IMF) to unify the multiple exchange rates as part of measures to improve the transparency of its currency-management system.
CBN had adjusted the naira’s rate from N360/$1 to N380/$1 at the Secondary Market Intervention Sales (SMIS) but some analysts have insisted that the CBN should officially recognise N381 per dollar as the official rate.
However, Sanusi has urged the CBN to ignore such calls.
According to him, given oil price volatility, the apex bank should maintain its stance of only stating that it was committed to exchange rate unification while waiting for oil prices to head north. “CBN has to avoid getting into a panic and basically wait for oil prices to go back up.”
He stated that while he welcomed the fact that the CBN is heading towards exchange rate unification, the banking watchdog, however, needs more support from other arms of government, especially with regard to ensuring more forex savings for the country.
“The CBN is taking too much of a burden for other sectors and other arms of government,” he said, adding that while the scrapping of fuel subsidies is a good development, the Nigerian National Petroleum Corporation (NNPC) still has to step up efforts to help conserve forex.
Sanusi said it was important that the CBN should not deplete the external reserves in a bid to defend the naira.
He said that healthy reserves helped to shield the economy during the global financial crisis of 2008/2009 and also helped him implement the banking reforms of that period.
Also speaking at the webinar, the Chief Executive Officer, Renaissance Capital Nigeria, Mr. Temitope Popoola, said that while the CBN is right to focus on exchange rate unification, the issue of lack of liquidity in the system has to be addressed.
“Before now, we had multiple exchange rates, but there was liquidity. But now, the concern is that we going towards rate unification, but there is no liquidity.”