Vice President Yemi Osinbajo on Tuesday said the present exchange rate policy benefits few people who have access to official market and encouraged huge arbitraging.
In a statement by his spokesman, Laolu Akande to debunked reports that the Vice President called for the devaluation of the naira, Osinbajo said he was not calling for the devaluation of the Naira.
He said Osinbajo was “against a willy-nilly devaluation of the naira,” but wants the monetary authority stop the huge arbitrage due to keeping the naira exchange “rate artificially low.”
“For context, the Vice President’s point was that currently the naira exchange rate benefits only those who are able to obtain the dollar at N410, some of who simply turn round and sell to the parallel market at N570.
“It is stopping this huge arbitrage of over N160 per dollar that the Vice President was talking about.
“Such a massive difference discourages doing proper business, when selling the dollar can bring in about 40 percent profit,” the Vice President spokesman said.
Akande stated that the Vice President called for measures that would increase the supply of foreign exchange in the market, “rather than simply managing demand, which opens up irresistible opportunities for arbitrage and corruption.”
“It is a well-known fact that foreign investors and exporters have been complaining that they could not bring foreign exchange in at N410, and then have to purchase foreign exchange in the parallel market at N570 to meet their various needs on account of unavailability of foreign exchange.
“Only a more market reflective exchange rate would ameliorate this. With an increase in the supply of dollars, the rates will drop and the value of the Naira will improve,” .
According to him, the real issue confronting the economy on this matter is how to improve the supply of foreign exchange, but this will not happen if we do not allow mechanisms like the Importers and Exporters window to work.
“If we allow this market mechanism to work as intended, we will find that the naira will appreciate against the dollar as we restore confidence in the system,” he stated.