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Emefiele refutes allegation of multiple exchange rates


The Central Bank of Nigeria, CBN Governor, Godwin Emefiele has labeled claims by many accusing the CBN of operating multiple Foreign Exchange, Forex rates as wrong. Rather, he explained that the apex bank only operates multiple foreign exchange windows.

The CBN boss while speaking on the theme: “Up against the tide: Nigeria’s heterodox monetary policy and the Bretton Woods consensus” at the University of Ibadan (UI) Distinguished Leadership Lecture Series, organised by the university in collaboration with the apex bank in Ibadan added that the multiple forex windows ensure that forex reaches critical sectors of the economy.

Emefiele noted that the naira exchange rate had substantially converged around N360/$1, whether it is in the parallel market, or in the CBN.

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In his words, “Let me defend multiple foreign exchanges. Banks have a responsibility to buy and sell foreign exchange to everybody. If I want to travel, whether you have a bank account or not, you should be free to buy foreign exchange for your trip. We saw a situation whereby the CBN allocates forex to a bank, they only sold to their corporate customers where they can make more money and that put pressure on the market. Then we started allocating forex to banks for Personal Travel Allowances and Small and Medium Enterprises (SMEs), and corporates and people said we are doing multiple exchange rates. That is wrong. I agree that we have multiple forex windows, not multiple exchange rates” he said.

The CBN boss also said that it is unusual for an economy to achieve growth and price stability at a go, adding that one is likely to displace the other. He likened the scenario to one wanting to eat his cake and having it. “You want growth and price stability? You can’t eat your cake and have it,” he said.

According to him,  transactions in I&E Forex window have reached over $48 billion since the inception and our foreign exchange reserves have risen to $45 billion in April 2019 from $23 billion in October 2016. He said that balancing the objectives of price stability with output stabilisation, especially in the face of external headwinds, remains a challenge to monetary policy and central banks, particularly in emerging and developing economies.

“Since the global financial crisis, many central banks have begun to promote structural transformation and economic growth, beyond the singular mandate of price stability.”

Consequently, policy toolkits now contain instruments that are aimed at developing the financial sector, engendering wider financial inclusion, and aligning financial policies with sustainable development and growth” he added.