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CIBN picks holes in free float of Naira, advocates managed floating

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The Chartered Institute of Bankers of Nigeria (CIBN) has expressed concerns over the sustainability of allowing the free float of the naira based on demand and supply dynamics for Nigeria’s economic growth.

Speaking at a press conference in Lagos, the Chairman of the Lagos State branch of CIBN, Adeyemo Adeoye emphasized the need to adopt a “managed floating” approach instead.

The press conference, held ahead of the institute’s event themed ‘Exchange rate unification: Global implications for households, organizations, and the country,’ shed light on the Institute’s perspective on currency policies.

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Adeoye cautioned against the risks of a pure free-floating naira model, asserting that such an approach, grounded in speculation, might diminish the naira’s effectiveness.

Drawing attention to the disparity between the official exchange rate and the parallel market rate, Adeoye explained that prior to the exchange rate unification policy, the difference was modest. However, this gap has expanded significantly since then, leading him to highlight the uniqueness of Nigeria’s economic context.

“In other climes, they reduce the supply of currency in the nation by increasing the reserve ratio of banks. Naturally, you will see the impact on the value of the currency, but we have a peculiar economy here where the rate between the parallel market and the official market is about five percent in other developed economies, but it is about 80 percent in Nigeria,” he stated.

Addressing the country’s economic strategy, Adeoye called on the administration led by President Bola Tinubu to focus on internal investments aimed at strengthening productive sectors.

(Edited by Oludare Mayowa; omayowa@globalfinancialdigest.com; Newsroom: +234 8033 964 138)

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