The World Bank has once again come hard on foreign exchange management of the Central Bank of Nigeria’s (CBN), insisting that it has remained a drain pipe on the dwindling fortunes of the country.
Specifically, the World Bank in a note published on its website revealed that the exchange rate management style of the CBN may have caused the country a whopping $144.1 billion from 2017 to the first quarter of 2021.According to the institution, the CBN multiple exchange rates “acts as an implicit tax levied by the CBN on federation revenue”.
The CBN’s management of Nigeria’s foreign exchange policy has been subject of national discourse with many analysts and economists expressing divergent views, but with the general concensus that the multiplkvity6of the Exchange rates isvinimsl to the economy.
But, despite propositions by both local and international analysts for a flexible exchange rate in the official window, the central bank governor has insisted that the current managed float system is the best.
Besides, President Muhammadu Buhari has always applauded CBN’s FX management, claiming that the situation would have been worst but for its efficient management policy.
In simple terms, a managed floating exchange rate is a system where currencies fluctuate daily but the regulatory authorities, including the government and the Reserve bank of India, may step in to control and stabilize the value of the currency.While a floating (or flexible) exchange rate regime is one in which a country’s exchange rate fluctuates in a wider range and the country’s monetary authority makes no attempt to fix it against any base currency, but left to market forces of demand and supply.
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The World Bank, IMF including Atiku Abubakar of the People’s Democratic Party and Peter Obi of the Labour Party, believe that Nigeria adopting a floating exchange rate regime would help improve the dollar supply in the market and remove multiple exchange rates.
ALSO READ:Nigerians Going Through Dark Tunnel Of Apprehension, Security, Safety-NLC
The World Bank, IMF including Atiku Abubakar of the People’s Democratic Party and Peter Obi of the Labour Party, believe that Nigeria adopting a floating exchange rate regime would help improve the dollar supply in the market and remove multiple exchange rates.
