Prof. Uche Uwaleke says the devaluation of the nation’s currency by the Central Bank of Nigeria (CBN) will discourage round-tripping and return of foreign investors.
Uwaleke, a Professor of Finance and Capital Market at the Nasarawa State University, told the News Agency of Nigeria (NAN) in Lagos on Sunday that the devaluation would have positive implications for financial markets.
He stated that it would discourage round tripping and other sharp practices associated with multiple exchange rates in the country.
Uwaleke added that the development would encourage the return of foreign investors who left our financial market because of multiple exchange rates.
On the flip side, he noted that the development would have negative implications for inflation and the 2020 budget predicted on N305 per dollar.
However, Prof. Sheriffdeen Tella, Professor of Economics, Olabisi Onabanjo University, Ago-Iwoye, Ogun, said the news of the naira devaluation was not surprising but was unfortunate.
“The pressure in the foreign exchange market we have witnessed in the last few weeks was not caused by the demand for foreign currency to buy inputs for production.
“It’s from people who are trying to hold foreign currency either for the speculative purpose for possible travels or to lodge same in their foreign accounts where BVN is not available to reveal their identities.
“So, devaluing the currency will encourage a further speculative attack on the naira.
“Haven emptied the sovereign wealth fund (SWF) account and Excess crude account, the CBN should not have taken this panic measure now that the recession has not taken root in the economy.
“It was a wrong move that was not based on the causal factor of the foreign currency demand pressure,” Tella said.
NAN reports that the apex bank on March 20 collapsed the multiple exchange rate policy that determined the value of the naira and adopted a single exchange rate.
This shows that the country would now have a uniform rate for the official rate, bureau de change operators, importers and exporters amongst others.
This was according to a circular signed by the CBN Director, Trade and Exchange Department, Ozoemena Nnaji, on the disbursement of the proceeds of the International Money Transfer Operator (IMTO).
It said International Money Transfer Service Operators to banks would be at N376 per dollar.
Banks to CBN would be N377 per dollar, CBN to Bureau de Change (BDC) N378 per dollar, BBC to end-users should not be more than N380 per dollar and the volume of sale to each market is 20,000 dollars per BDC.