Prof. Sherrifdeen Tella, a Senior Economist at the Olabisi Onabanjo Univeristy, Ago-Iwoye, Ogun, wants the Central Bank of Nigeria (CBN) to allow the forces of demand and supply to determine the naira’s rate.
The don told the News Agency of Nigeria (NAN) on Monday in Lagos that defending the naira with external reserves would not help the currency, rather the CBN should allow market forces to determine it.
The lecturer was reacting to the call by the International Monetary Fund (IMF) on Nigeria to be careful on the use of its foreign reserves.
IMF had said the call was necessary because oil price might fall at any time in the international market.
But the CBN responded to the IMF’s call, saying CBN’s policy preference for now was to maintain exchange rate stability.
The CBN and IMF gave their stances at the World Bank/IMF 2018 meeting on Oct. 11 in Bali, Indonesia.
But Tella said the CBN should look beyond the proceeds from oil for such purposes.
The don said that the country needed to widen production at the domestic sector, to enable it to earn more foreign exchange from exports.
He said that the country would always rely on the foreign exchange from exports when it was difficult to sell its crude at the international market.
“This is because relying on oil proceeds can be counterproductive in the defence of the naira.
”The CBN should allow the rate to slide down a little to allow the forces of demand and supply to determine it,” Tella said.
NAN reports that data from the CBN reveals that Nigeria’s external reserves stand at 42.34 billion dollars as at Oct. 25, against the 47.28 billion dollars on July 25.
