27 February 2015, Lagos – A financial expert, Mr Sewa Wusu, on Wednesday commended the Central Bank of Nigeria, CBN, for adopting the “float” exchange rate mechanism to ensure price stability.Wusu in Lagos said that the measure would have positive effect on the economy in the medium and long term.
He said the float exchange rate mechanism adopted by CBN would help the naira to achieve its true value.
Wusu, Head, Research & Investment Advisory at Sterling Capital, Lagos, reiterated that float mechanism determined the value of the Naira through market forces.
The CBN in January embarked on some monetary measures to contain round-tripping, speculative demand, rent-seeking and spurious demands for foreign exchange.
The measures include the devaluation of the Naira, closure of the retail and wholesale Dutch auction windows, among others.
Wusu said the steps were positive in the sense that it had been able to control arbitrary opportunities and speculations.
The expert said that the major challenge of the country had been its dependence on revenue from crude, adding that the situation had placed the country’s potency to import at low ebb.
He said that if the economy had been diversified before now the Naira would have immediately found its true value.
Wusu said that a diversified economy allowed more foreign earnings into the country and reduced its demand for imports.
He noted that Nigerians would feel the impact of diversification in the next five to 10 years if the bottlenecks in the sectors were removed.
He also urged policy makers to be committed and have the political will to expand the economic base of the country.