Expert tells FG to boost FX earnings to stabilise Naira

A Financial Analyst, Mr Muktar Muhammed, has urged the Federal Government to take steps to increase foreign exchange earnings to stabilise the Naira.

Muhammed said this in an interview with the News Agency of Nigeria (NAN) on Saturday in Abuja against the backdrop of depleting foreign exchange reserves of the country.

NAN reports that the dollar which exchanges for N460 at the official, Investors and Exporters (I&E) FX window, exchanges for N760 at the back market.

The Central Bank of Nigeria (CBN) had taken several steps in recent times to stabilise the Naira against foreign currency.

Steps like the Naira4dollar incentive to boost diaspora remittances, the ban on sale of FX to Bureaux de Change, among others but they have not yielded the desired result.

According to Muhammed, the government needs to attract more foreign investments and earn more in foreign currency.

“No matter the policy, if you are not earning more FX into the economy to boost the reserve, and if your economy is not doing so much exportation, then you have the kind of supply challenge we are facing with FX.

“This is because we have a lot demand but low supply. The economic variables of demand and supply comes to play; the higher the demand, the lower the supply.

“We have a lot of Nigerians in need of FX to travel or go to school or do business with their manufacturers. So, earn more FX into the economy, boost our reserve and in turn legitimate dollar demand will be met,” he said.

He said that the CBN had introduced some currency management initiatives which were expected to impact positively on the Naira.

“There are policies that should ordinarily improve the exchange rate like the RT200, but it is not doing that yet because it will take time.

“Also, another missing link is the Bureaux de Change. They were shut down by CBN and are supposed to operate independently, but no market was created to address their former customers.

“Once the market is not there, the demand of Bureau de Change will still go up,” he said.

RT200 is a non-oil exports proceeds repatriation rebate scheme that is part of the apex bank’s effort to reduce exposure to volatile sources of FX and to earn more stable and sustainable inflows of FX into the country.

Muhammed also mentioned corruption as a factor that affects the value of the Naira.

“A lot of monies gotten through corrupt means are taken out of the banking space and used to mop up dollars,” he said.