Nigeria to continue to exchange rate convergence around investors’ window

FILE PHOTO: Central Bank Governor Godwin Emefiele speaks during the monthly Monetary Policy Committee meeting in Abuja, Nigeria January 26, 2016. REUTERS/Afolabi Sotunde/File Photo
FILE PHOTO: Central Bank Governor Godwin Emefiele. REUTERS/Afolabi Sotunde/File Photo

Nigeria is to maintain its policy of exchange rate convergence around what is offered in the investors and exporters window, according to the country’s central bank.

Central Bank Governor Godwin Emefiele, who spoke to investors on Tuesday, said that individuals purchasing dollars from the parallel market are engaged in ‘illegal business’ and ‘corrupt practices’ and the bank will not use the unofficial market as base for convergence.

“The reserve still remains above $36 billion. I would imagine it is enough to make somebody comfortable if you want to do business in Nigeria,” Emefiele said.

Emefiele reaffirmed that the central bank intended to oversee an orderly exit of foreign investors from the country and meet all its obligations.

“Having gone through this in 2015/2016, I am saying there’s no need for anybody to worry as long as you allow us to deal with this issue in an orderly fashion; you will be paid your money.”

The Naira, Nigeria’ currency, has been under pressure in recent months after oil prices dropped sharply following a dispute between Russia and Saudi Arabia over a deeper production cut and effects brought about by the COVID-19 pandemic.

However, the Naira has stabilized at an exchange rate of 388 naira to a dollar on the nafex window in the past two months and this is expected to be maintained as an increase in oil prices translates to higher foreign exchange inflows for Nigeria.

Emefiele forecasted that Africa’s largest economy may avoid a contraction in 2020 if it stays the path of vigorous policies formulated to support growth.

He added that an improvement in productivity and harvest season is expected to slow down inflation in the second half of 2020.

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