As someone who wants Nigeria to be a good country, I have a concern about government’s policy, especially when it has to do with the economy of the country.
However, my views may as always be discarded, classified as unimportant or pretend not to be seen, but I must not relent or discouraged to adding my voice as long as we still enjoy freedom of speech.
First, I must applaud the Central Bank of Nigeria (CBN) for its relentless efforts to save Naira from foreign currency dominance, but I must say the apex bank over zealousness is technically destroying the Nigerian economy.
In this post are my personal views on CBN monetary policy regarding FOREX, and I stand to be corrected.
I’m not unaware that CBN has many financial experts, but they may be failing a simple arithmetic which may endanger the economy of our country if care is not promptly taken. What do i know?
Recall that CBN recently devalued ‘Naira’, from 360/$1 to 380/$1 to borrow from world bank.
CBN after borrowing the money wants to inject same into FOR EX with intents to bring down USD from its high exchange rate at black market. i.e. From N477/$1 to N386/$1. According to a circular from CBN, the apex bank will resume to sell USD to Bureau De Change (BDC) at N384/$1, and BDC will sell at N386/$1 to end users.
Now, if Naira is to be sold at N386/$1 to end users against N380/$1 official rate, don’t you think CBN has technically devalued Naira again? Since CBN fixes official rate at N380/$1, why won’t they sell below that rate to BDC; say N378/$1, so BDC can sell exactly at N380/$1 to end users?
What do you think would happen if CBN stop selling FOREX to BDC at any time? Maybe $1 will rise to N500 or above.
Why did CBN stop selling USD to BDC at the wake of lockdown and now to resume again? Do they expect BDC operators that bought at a high rate to sell at a loss? I think that would inadvertently give BDC power to manipulate FOREX.
ANOTHER WAY CBN IS DESTROYING NIGERIAN ECONOMY
CBN does not always consider small businesses that also bring dollars into Nigeria when making its policies.
The CBN announcement to resume selling FOREX to Bureau De Change operators halt many small businesses that bring foreign currency into Nigeria. The owners of these small businesses are no longer buying dollars to fund their business because they await the CBN cheap rate, which we are yet to see. Nothing works now, and Nigeria is loosing terribly.