Former deputy governor of the Central Bank of Nigeria, Kingsley Moghalu, dismissed the notion of the Naira reaching N400 to the Dollar as unrealistic. He expressed this view in a statement posted on his X handle on Sunday.
Moghalu argued that the exchange rate should reflect its true market value. He criticized the Central Bank for maintaining artificiality in the exchange rate, which he believed was done to appease those in political power who lacked economic understanding.
According to the economist, this artificiality created opportunities for speculators to exploit the system, leading to economic instability.
Moghalu emphasized the need for Nigeria to focus on building a value-added manufacturing export economy that could generate significant foreign exchange earnings beyond oil. He believed that prioritizing such efforts would be beneficial for the country’s economy in the long term.
Moghalu said, “Those who want the Naira to be N400 to the $ are living in a dream world. Even discounting for the negative impact of speculative attacks on the value of the Naira, the exchange rate will (and should) reflect its market value in reality, not the artificiality that the central bank sought to maintain to please economic illiterates in political power at the time.
“That artificiality created room for massive arbitrage by speculators which bled the economy. Nigeria does not (yet) have a productive export economy. That’s the heart of the matter.
“And we do not have $100 billion in foreign reserves. So on what basis would the Naira forex rate return to some fantasy land soon? It will also take time to regain or achieve full investor confidence such as we had when we were there (and the rate was N150-165 to the $.
“The sooner we focus on a painstaking creation of value-added manufacturing export economy that earns forex beyond oil in real and significant terms, the better.
“Key to this is the electricity conundrum in which we are at less than 4,000 megawatts of generation for a population of 200 million for decades now.
“Take power to even 20K megawatts (let’s not talk of 50K for South Africa’s 60 million population or Brazil’s 181K megawatts for a population only slightly larger than Nigeria) and you will see what the Nigerian entrepreneurial spirit is capable of,” he said.
