“We can see that the exchange rate between the Naira and the
dollar has started coming down which means it is a good initiative that is well
thought out,” the President/ Chairman of Council of CIBN, Dr Ken Opara said.
Okpara, also commended President Bola Tinubu for the ongoing
efforts to unify the Naira exchange rate to save the country from financial
crisis.
He spoke at the 2023 Lagos Bankers Night with the theme, ”
Exchange Rate Unification: Glocal Implications, Organisation’s and the Country
“, on Friday night in Lagos.
He added that CIBN has always advocated transparency and a
free market that would allow the interplay of supply and demand.
He said, “The Chartered Institute of Bankers of Nigeria
totally supports the Central Bank of Nigeria’s reform as it relates to the
unification of the exchange rate and other measures basically taken to ensure
the true value of the Naira.
“As a matter of fact, we have been advocating for this and
during the week, Dr ‘Biodun Adedipe, leading other scholars, and Mr Laoye
Jaiyeola of the Nigeria Economic Summit Group, gathered at the Bankers House to
applaud the reform, especially as it relates to the unification of the exchange
rate.
“We have seen that the effort that the Central Bank of
Nigeria has initiated is already yielding dividend.
Opara said that the institute recently organised a half year
economic review, where captains of industries also spoke in support of the
reform.
He urged Nigerians to take advantage of the good
opportunities that the reform had presented, saying wherever there are
challenges lie in opportunities.
The CIBN president pledged the institutes continued
commitment to making contributions and suggestions relating to what should be
done to support and grow the country.
He said, “As it is the concept of the industry; we played
this role very well when the industry was facing challenges and we will
continue to do that because we believe that the banking industry is very solid,
stable and efficient.”
He described the payment system in Nigeria as “the best” all
over the world, stressing that it is a system that one could consummate
transactions on an online real-time basis.
Opara said this showed that the banking industry and its
regulator had done well in stabilising what an effective payment system.
He debunked media reports that its Lagos branch was not in
support of the exchange rate unification, describing as “untrue”, but
calculated to cause panic.
Chief Consultant of B. Adedipe Associates Ltd. (BAA
Consult), Dr ‘Biodun Adedipe, said that the exchange rate unification, which
was not new in Nigeria, had gone through the route before with different
appellations.
“Let me trade very quickly what I brand as Nigeria’s journey
to exchange rate unification.
“Nigeria has gone through this route before but with
different appellations like devaluation, correction, alignment, depreciation,
all of which are matter of semantics.
“The simple interpretation of this is to remove the premium
on the official rate and the parallel market or road side market.
“Of course, this is a typical Bretton Woods recipe; keep
premium within five per cent to decentivise round tripping and then find
liquidity to sustain it.
“This is the easy way out; but, it never brings enduring
solution to the persistent crisis in the external sector of the Nigerian
economy.”.
According to him, there are 54 evidence-based research
documents to establish that free float is not always the most appropriate for
all economics.
Giving historical illustrations, the expert noted that
exchange rate movements had a more significant impact on all other prices more
than interest rates adjustment.
He said the only period that Nigeria experienced a
successful and stable rate convergence in the country was when it had a
significant external reserve.
Adedipe said it took the country an average of two to six
weeks for the parallel market rates to diverge from the official exchange rate
during each episode of premium removal.
He added that speculative attack on the currency occurred
each time there was no clear sight to a stable and enduring supply.
President Bola Tinubu, had during his inauguration on May
29, said his administration would seek to bring the different exchange rate
regimes being operated across the country’s foreign exchange channels under a
single regime.
However, in June, Tinubu through the Special Adviser on
Special Duties, Communications, and Strategy, Dele Alake, announced the
implementation of a unified exchange rate to save the country from a financial
crisis.
He emphasised that his decision to implement a managed
float, similar to his approach to fuel subsidy removal, was in the best
interest of Nigeria. NAN