Another major policy summersault by the present administration may
soon be experienced, as Vice President Yemi Osinbajo has hinted that the
government may adopt a more flexible option in the management of
foreign exchange.
The flexible option, according to analysts, would portend devaluation
of the nation’s currency, which currently exchanges for N197 to the
dollar at the less accessible official window, against N318 it is
currently trading against the green back at the parallel
market.President Muhammadu Buhari has consistently affirmed that the
naira would not be devalued, despite some pressures from within and
outside.
The vice president’s statement is coming on the heels of recent hike
in petrol prices in the country, under a new deregulated regime, despite
the known stance of Buhari to the contrary.
Osinbajo, at an investors’ forum hosted by Renaissance Capital in
Lagos on Wednesday, explained that the more flexible foreign exchange
policy would “be able to attract more capital into the system and ease
business.” “We believe there must be some substantial re-evaluation of
the foreign exchange policy, especially with a view to increasing
foreign exchange supply, encouraging capital importation and also being
able to allow free flow of remittances…we expect that with a more
flexible policy, we will be able to attract more capital into the system
and ease business,” Osinbajo added.
The vice president, who admitted that the executive was “not
responsible for monetary policy,” however, added that he hoped the
Central Bank of Nigeria (CBN) would act soon on this policy change.
Despite the decline in foreign exchange earnings due to the tumbling
oil price, President Buhari has held tightly to his view that the naira
should not be devalued further. Since taking office nearly a year ago,
he has repeatedly voiced his support for the CBN Governor, Godwin
Emefiele’s pegging of the naira’s official rate at 197-199 against the
dollar since March 2015.
“We have effectively liberalised downstream sector of oil with a N145
price ceiling. Just not enough forex to continue NNPC fuel
importation,” Osinbajo said.
He said he hoped to persuade the CBN to change some polices to
improve foreign exchange supply, adding that the government would make
sure that the banks survive an economic crisis due to a slump in oil
revenues. “We will do anything to ensure that the banks remain viable.”
On the renewed attacks on oil installations, he said: “We want to
increase security around installations and we have to use a bit more
technology and a dedicated force.”
Osinbajo, who addressed the over 100 investors and corporate
representatives at the seventh edition of the Rencap annual pan Africa
investor conference, also spoke on some key areas -quick deliverables in
the budget that the government intends to focus on, including power;
transportation-rail project; housing among others.
The Chief Executive, Financial Derivatives Company, Bismarck Rewane,
who hailed government’s moves towards full deregulation of the
downstream sector, insisted that this should be followed with
devaluation of the embattled currency.
“We must follow this with naira adjustment to say around N230 to the
USD and if this happens, we will begin to see the parallel market rates
drop to around N255 as we inch towards equilibrium. So what will be
required will be a minimal naira adjustment. A very good start,” Rewane
said.
Some analysts said last night, that Osinbajo’s revelation is a
welcome one, since President Buhari had refused to devalue, despite
public outcry for it in the past few months.
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PLEASE BE POLITE