The federal government on Wednesday hinted of plans to unify the current Naira multiple exchange rate regime as a strategic monetary policy option to generate more local currency from its dollar inflows and manage the rate in a sustainable manner.
The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, was quoted by Reuters, based on what the online medium linked to an official document, as proposing as replacement of the current exchange regime.
Ahmed was also quoted as saying that the government will also, amongst other options being considered to strengthen the national currency’s exchange rates, direct oil companies to sell dollars to the Central Bank of Nigeria instead of the Nigerian National Petroleum Corporation (NNPC).
The document by the ministry also reiterated government’s commitment to full deregulation of petroleum prices as part of measures to safeguard oil revenues.
According to the document, the proposed policy will be implemented over a 12 month period.
It would be recalled that the monetary authorities had, over the past years, subscribed to a multiple exchange rate regime to mitigate the exchange rates volatility in the market and by implication, avoid major devaluation of the Naira.
However, latest developments in the international oil market occasioned by the impact of the COVID-19 pandemic on global economies, particularly oil exporting nations’, have continued to threaten Nigeria’s forex accruals as earnings from crude oil exports have dwindled significantly over the past months.
Meanwhile, the Naira opened on the exchange market at 6.2% depreciation against the U.S. dollar yesterday as traders quoted the currency close to the over-the-counter spot market rate on the back of speculations that the monetary authorities will sustain, with stronger zeal, efforts to beef up the nation’s foreign reserves.
