The progress in Nigeria’s economic areas such as Agriculture, Manufacturing, Oil and Gas was a step in the right direction, a top bank executive has said.
Akinsowon Dawodu,the Managing Director of Citibank Nigeria Limited, who stated this on Wednesday in the southern city of Calabar at the apex bank 20th Seminar for reporters in Nigeria, urged the Central Bank of Nigeria (CBN) to allow the country’s exchange rate to be determined by trading in the forex market in contrast to a fixed rate.
The seminar aimed at educating the media on the impact of oil crude prices on external reserves and exchange rate management in Nigeria.
Dawodu presented a paper on the implications of closure of Retail Dutch Auction System (RDAS) and Wholesale Dutch Auction System (WDAS) segment of the Foreign Exchange Market in Nigeria.
Nigeria was practicing an Intermediate Exchange Rate regime which was characterized by inconsistency problem and exchange rate volatility at the moment, the banker told reporters.
He said once the transition had been done, it would eliminate the requirement to hold large reserves, hence free funds for necessary infrastructure development.
Dawodu said the closure of Retail Dutch Auction System (RDAS) and Wholesale Dutch Auction System (WDAS) by the CBN was also the right step to stabilize the nation’s currency.
“The closure of RDAs and WDAS will unify the market. And when it is unified, the naira will be at good price. So the closure is a good step in the right direction,” he added.
Dawodu said that economic transformation and fiscal discipline were prerequisite for Nigeria to be ready for a free floated economy.
The financial expert also recommended that the apex bank should reduce intervention in the FX market and be frugal with the use of the nation’s reserve, to further stabilize the economy. Enditem