Former Deputy Governor of the Central Bank of Nigeria, Dr. Tunde Lemo, expressed caution against the free floating of the naira.
The discussion, themed “Persistent Unstable Macroeconomic Environment: Any Way Out,” featured Lemo’s insights on the country’s economic challenges.
Lemo emphasized that the naira should not be floated at the present time, citing the limited number of world currencies that are on free float.
He pointed out that the naira lacks the necessary reserve levels, and Nigeria faces trade and balance of payment deficits, making free floating a risky move. Lemo stated, “I think that is a fast way to suicide.”
To address the situation, Lemo urged the Central Bank to clear the backlog in the foreign exchange market, emphasizing the importance of restoring confidence and bolstering the naira’s value.
He highlighted the need for transparency and market clarity, as well as the resolution of outstanding commitments, including a backlog of approximately $6.8 billion in swap deals, forward deals, and airline commitments.
Restoring confidence in the currency market, Lemo concluded, is crucial for stabilizing Nigeria’s economic environment amidst ongoing challenges.