The Federal Government needs a “substantial” review of its foreign exchange policies and will see very soon a more flexible approach, Vice President Yemi Osinbajo said on Wednesday, as it faces dollar shortages and investor complaints about a high naira rate.
Asked whether Nigeria needed to devalue the naira, Osinbajo said that “there is an ongoing debate” in government circles and among other parties but that it was too early to say whether such a move made sense.
Nigeria’s President Muhammadu Buhari has said he does not favour devaluing the currency.
Osinbajo told a Lagos business conference he hoped to persuade the central bank to change some policies to improve foreign exchange supply as current supply management is not working well.
“We believe there must be some substantial revaluation for the foreign exchange policy,” Osinbajo said. This would help boost foreign exchange supply and encourage capital inflows and a free flow of remittances, he said.
“There has been a sharp decline in foreign exchange earnings. The executive is not responsible for monetary policy but we have made the point clearly that demand management will not take us out of the woods,” he said.
“We need a review,” he said in response to questions from investors. “Very soon we will see a more flexible approach,” he added, but he declined to go into specifics.
The central bank has imposed hard currency curbs and frozen the naira rate to the dollar, which has hit investment as foreign firms expect Nigeria to devalue the currency anyway at some point due to a slump in oil revenues.
The naira has fallen 40 percent below the official rate on the parallel market where firms go to get hard currency to fund their imports.
