Gịnị bụ atụmatụ gị iji chịkọta ọnụ ahịa na ime ka naira sie ike n'enweghị iji akụrụngwa mbara (reserves) mee ihe ọzọ karịa otú esi eji ya eme ihe? Ka m gbatie ụzọ ọzọ dị mfe: Gịnị bụ atụmatụ gị iji kpuchie uru ego na-eji arịgo (inflation) ma mee ka naira sie ike n'adịghị eme ka akụrụngwa mbara (reserves) gbadata?

2. A fixed exchange rate system would be out of the question. First, it would not be in line with our philosophy of running an open, private sector friendly economy. Secondly, operating a successful fixed-exchange rate system would require sufficient FX reserves to defend the domestic currency at all times. But as is well known, Nigeria’s major challenge is the persistent FX illiquidity occasioned by limited foreign exchange inflows to the country. Without sufficient FX reserves, confidence in the Nigerian economy will remain low, and Naira will remain under pressure. The economy will have no firepower to support its currency. Besides, a fixed-exchange rate system is akin to running a subsidy regime! 3. On the other hand, given Nigeria’s underlying economic conditions, adopting a floating exchange rate system would be an overkill. We would have encouraged the Central Bank of Nigeria to adopt a gradualist approach to FX management. A managed-floating system would have been a preferred option. In simple terms, in such a system, the Naira may fluctuate daily, but the CBN will step in to control and stabilize its value. Such control will be exercised judiciously and responsibly, especially to curve speculative activities.

4. Why control, you may ask. (i). Nigeria has insufficient, unstable, and precarious foreign reserves to support a free-floating rate regime. Nigeria’s reserves did not have enough foreign exchange that can be sold freely at fair market prices during crises. (ii). Nigeria is not earning enough US$ from its sales of crude oil because its production of oil has been declining. And, (iii). Nigeria is not attracting foreign investment in appreciable quantities. These are enough reasons for Nigeria to seek to have a greater control of the market, at least in the short to medium term when convergence is expected to be achieved. Tinubu’s new policy FX management policy was hurriedly put together without proper plans and consultations with stakeholders. The government failed to anticipate or downplayed the potential and real negative consequences of its actions The Government did not allow the CBN the independence to design and implement a sound FX Management Policy that would have dealt with such issues as increasing liquidity, curtailing/regulating demand, dealing with FX backlogs and rate convergence.

ON FOREIGN EXCHANGE REFORMS I also made a commitment to reform the operation of the foreign exchange market. Specifically, there was a commitment to eliminate multiple exchange rate windows. The system only served to enrich opportunists, rent-seekers, middlemen, arbitrageurs, and fraudsters. What would I have done? A fixed exchange rate system was out of the question because it would not be in line with our philosophy of running an open, private sector friendly economy. On the other hand, given Nigeria’s underlying economic conditions, adopting a floating exchange rate system would be an overkill. We would have encouraged our Central Bank to adopt a gradualist approach to FX management. A managed-floating system would have been a preferred option. -AA

While the Nigerian worker pays more to transport themselves to and fro work, more to eat, more to keep their children in school, the administration is signing off on an $11 billion contract that bypassed every safeguard of transparency and accountability that should protect the public purse. Currency Mismanagement and Economic Pain. This administration's decision to float the nation’s currency has led to the free fall of the Naira and the ensuing erosion of purchasing power is compounding the misery of the fuel subsidy removal. Again, exchange rate reform is a legitimate policy debate. But the manner in which it was done, abruptly, without a credible foreign exchange supply strategy, without the structural reforms needed to attract the inflows that would stabilise the currency, caused the Naira to enter a catastrophic free fall. The exchange rate, which was already under severe pressure, crashed to levels that had never before been seen in our national economic history.

A fixed exchange rate is out of the question for me, it doesn't fit an open, private-sector friendly economy, and Nigeria simply hasn't had the foreign exchange reserves to defend the naira that way. But a full free float has also been an overkill given our conditions. What I've called for is a managed float: the naira can move day to day, but the Central Bank steps in to control and stabilise its value, and acts firmly against speculation, a gradual, responsible approach rather than an abrupt one.

A fixed exchange rate was never something I'd consider. It doesn't fit with running an open, private sector friendly economy, and Nigeria hasn't had the foreign exchange reserves to defend the Naira under such a system. But a fully floating rate, done abruptly, was an overkill too. My preferred path was a managed-floating system: the Naira would fluctuate daily, but the Central Bank would step in, judiciously and responsibly, to control and stabilise its value and curb speculation. I would have taken a gradualist approach, not a free float.