Mr Moghalu disclosed this while speaking at the just concluded 29th National Economic Summit in Abuja.
A former deputy governor of the Central Bank of Nigeria (CBN), Kingsley Moghalu, has said the only way to fix the naira is for the Nigerian economy to become a productive export-driven economy.
Mr Moghalu disclosed this while speaking at the just concluded 29th National Economic Summit in Abuja.
Over the past four months, the naira has depreciated by over 50 per cent at both the authorised and unauthorised market segments, after the Central Bank of Nigeria (CBN) announced in June that it had collapsed all forex windows into the Investors and Exporters (I&E) window.
The move, according to the apex bank, is part of the Nigerian government’s efforts to improve liquidity and stability in the market and attract foreign investors into the Nigerian economy.
Although the policy was widely applauded as well-intentioned and necessary, it has put additional pressure on the local currency and manufacturers, with ripple effects on domestic prices.
Speaking at the summit, Mr Moghalu said there are different strategies on how to fix the naira.
“The way to fix the naira that has problems is a combination of things. Some of them are short-term, but let me start with the long-term because we’ve been trying to fix the problem of the naira for a long, long time. It’s just been getting worse,” Mr Moghalu said
“The only way you can fix the naira is that the Nigerian economy needs to become a productive export-driven economy. I can’t say this enough and I am not the only one who’s saying it. But up till today, we have not seen a comprehensive plan with targets to achieve this.
“And even when plans are made, they are not always as informed as they should be. You see. I mean, it’s important to clear those battles because one of the problems and a major problem that is affecting the naira is confidence.”
He noted that the only way the country can encourage immediate inflows that will stabilize the naira is through foreign portfolio investment.
“Recent events have convinced me that we have to. One of the reasons is that the only way you can encourage immediate inflows that will stabilize the naira is not even so much foreign investment, it is foreign portfolio investment, which is investments in the open market operations, treasury bills and the stock exchange.
“For them (investors) to do that, they need to see that the gap between the monetary policy rate… which today is at about 19 per cent (18.75) and the inflation rate which is almost at 27 per cent, must be closed.
“That gap must be narrowed, otherwise, investors feel it is not a very sound investment to make in terms of the yield,” he said.
Last Tuesday, PREMIUM TIMES reported that the Naira plummeted to its lowest rate against the United States dollar at the official market.
According to market data published on the FMDQ website, the local currency closed at N848.12 per dollar on Tuesday, as against N778.80 recorded in the previous session on Monday. Tuesday’s rate translates to 8.9 per cent depreciation from N778.80 it exchanged on Monday.
According to the data, the naira opened at N758.50 but slipped to N848.12 at the close of business on Tuesday as foreign exchange supply within the market segment skyrocketed significantly.
This newspaper reported that forex supplied within the session on Tuesday is pegged at $134.8 million, which represents about a 212 per cent increase from $43.09 million posted on Monday.
Within the business period on Tuesday, the naira reached an intraday high of N700.00 and spiralled to a low of N981.00 before settling at N848.12 per $1.