The Central Bank of Nigeria has revealed that the recent monetary policy changes implemented in the foreign exchange market is not a free float but a managed float.
Deputy Governor, Kingsley Obiora disclosed this in a recent interview with Bloomberg in Rabat, Morocco.
Obiora noted that the apex bank has no plans of setting the naira on complete free float as there is no country that runs 100 per cent free float.
“There is no country in the world, even the US, that has a completely free float,” he said.
“It may be too early to determine if the naira’s exchange rate to the dollar has bottomed out.”
He revealed that the CBN has not intervened in the nation’s forex market since the implementation of the new policies.
“We are allowing the market itself to set a price,” he stated.
The CBN chief hinted that further measures that will loosen the market will be announced “in the next couple of weeks.”
He said he expects a positive impact of the policy changes and the removal of subsidies on the nation’s GDP growth next year, forecasting a growth of 5% to 6%.
“The removal of subsidies, along with the convergence of the exchange rates will drive economic growth, especially from next year when the policies start making an impact.
“I completely expect us to do 5% to 6% growth next year,”
“Over the next four years, you may see the GDP approach something like $600 billion to $700 billion,”
The operational changes announced by CBN last week include the re-introduction of the “willing buyer, willing seller” model at the I&E window, which literally meant the floating of the naira to allow market forces determine the price. The policy changes announced by the CBN include:
- Abolishment of segmentation. All segments are now collapsed into the Investors and Exporters (l&E) window. Applications for medicals, school fees, BTAPTA, and SMEs would continue to be processed through deposit money banks.
- Re-introduction of the “Willing Buyer, Willing Seller” model at the l&E Window. Operations in this window shall be guided by the extant circular on the establishment of the window, dated 21 April 2017 and referenced FMD/DIR/CIR/GEN/O8/007. All eligible transactions are permitted to access foreign exchange at this window
- Cessation of RT200 Rebate Scheme and the Naira4Dollar Remittance Scheme, with effect from 30 June 2023.
Ifunanya Ikueze is an Engineer, Safety Professional, Writer, Investor, Entrepreneur and Educator.
