By Bassey Udo
Nigerians need a more market reflective exchange rate to curb arbitrage and corruption in the foreign exchange policy not devaluation of the Naira, Vice President Yemi Osinbajo has said.
The VP was reacting to media reports accusing him of calling for the devaluation of the national currency in the wake of Naira’s continued loss of value against the dollar and other international currencies.
Although Osinbajo said the Naira exchange rate was being kept artificially low, he said this cannot be misconstrued as him calling for the devaluation of the Naira.
“He has, at all times, argued against a willy-nilly devaluation of the Naira,” the VP’s spokesperson, Laolu Akande said on Tuesday.
“For context, the Vice President’s point was that currently, the Naira exchange rate benefits only those who are able to obtain the dollar at N410, some of who simply turn round and sell to the parallel market at N570.
“It is stopping this huge arbitrage of over N160 per dollar that the Vice President was talking about. Such a massive difference discourages doing proper business, when selling the dollar can bring in about 40% profit!” Akande added.
He said this was why the VP called for measures that would increase the supply of foreign exchange in the market, rather than simply managing demand, which opens up irresistible opportunities for arbitrage and corruption.
“It is a well-known fact that foreign investors and exporters have been complaining that they could not bring foreign exchange in at N410, and then have to purchase foreign exchange in the parallel market at N570 to meet their various needs on account of unavailability of foreign exchange.
“Only a more market reflective exchange rate would ameliorate this. With an increase in the supply of dollars, the rates will drop and the value of the Naira will improve.
“The real issue confronting the economy on this matter is how to improve the supply of foreign exchange. But this will not happen if we do not allow mechanisms like the Importers and Exporters window to work. If we allow this market mechanism to work as intended, we will find that the Naira will appreciate against the dollar as we restore confidence in the system,” the VP said.