AN ECONOMIST CALLS ON MONETARY AUTHORITIES TO HARMONIZE EXCHANGE RATES

The Centre for the Promotion of Private Enterprise (CPPE), in the organized private sector, has reiterated the FX market by combining the various rates and making sure the rates are driven by the market. This recommendation follows the sustained depreciation of the naira throughout the year 2022. In an interview with the New Telegraph in Lagos by Dr. Muda Yusuf, the Director and Chief Executive Officer of CPPE. According to him, the official rate had risen to N461/$ and the parallel/BDC rate reached N750/$.

In order to increase stability, liquidity, and transparency in the forex market must liberalize the market by combining the various rates and making sure that forex rates are determined by the market. Given that there have been ongoing uncertainty and arbitrage opportunities caused by the several exchange rate, Yusuf stated: The unification is intended to strengthen our currency.

The renowned economist continued to discuss the evolution, by explaining that in 2022, the Central Bank of Nigeria (CBN) implemented a policy to stabilize prices in response to the skyrocketing inflation rate. According to him, as a result, rates increased from 11.5 percent in January to a peak of 16.5 percent in November 2022. In order to stop the ongoing inflation and stop capital flight, he said, “this is projected to rise further during the MPC meeting in January to 17%. ”The CPPE had earlier recommended that decreasing in rate alone would not curb inflation, except for the real factors like high energy costs, scarcity of foreign exchange, the security challenges around agricultural production locations that have fueled low production and high logistics costs,“ Yusuf emphasized. ”In 2023, we need fiscal interventions to support strategic sectors like manufacturing, agriculture, and more allocation of foregone funds. The head of CPPE also noted that if the issue of forex volatility and inflation rate is not addressed by the government in the nation's economy, many more production activities may be restricted in the upcoming months due to the excruciating burden of inflation, forex scarcity, high energy costs, and weakening purchasing power. However, he advocated that the Federal Government continue its targeted initiatives in a few key industries, such as manufacturing, export infrastructure, agriculture, and combating insecurity. Similarly, the former LCCI Director-General noted that by following environmental norms and putting in place preventive infrastructure to manage natural calamities like flooding. He said: “Climate change's effects on agriculture are becoming more and more obvious, and we need to act quickly to prevent food insecurity and rising food prices. ”Our highways and the disconnection between farmers, industry, and marketplaces have increased the cost of logistics. For the advantage of the organized private sector, CPPE wants to see more advances like this. Manufacturers should be helped with subsidized input and higher allocation of forex for importing crucial inputs in order to lessen the shocks from disruptions for raw materials. The Central Bank of Nigeria should make sure that targeted concessionary lending to the private sector is maintained for MSMEs, he said, “as it embarks to contain inflation.” It is said that, the government should look for way to solve the forex scarcity problems.