The Abuja Chamber of Commerce and Industry (ACCI) has said that it supported the Central Bank of Nigeria on the new guidelines on the foreign exchange market and the flexibility of the naira, noting that it was in line with the objectives of efficiency and facilitating a liquid and transparent foreign exchange market towards the liberalization of the market.
In a statement made available to journalists on Wednesday in Abuja by the President Mr Tony Ejinkeoyen stated that, despite the fear of exchange rate risk of volatility, they believed that the flexible exchange rates are automatic stabilizers that could remove the economic frictions created by a fixed exchange rate.
Ejinkeoyen said that the CBN can implement autonomous monetary policies to address problems with inflation and output.
Though, he said, monetary policies affect inflation rates, CBN can decide on their long-run inflation rate and would not have to import their trade partners’ inflation rate, as is the case under a fixed exchange rate.
“Bsidese, the futures end of the foreign exchange market will allow for proper planning by businesses, because most end users can originate deals for the future and it will be flexible enough that they can know what the exact rate will be at the time they need it.”
“The implications of the revised guidelines for operation of the Nigerian inter-bank foreign exchange market are: The value of the naira will be devalued, the dual exchange rate regime stands abolished, and the exchange rate will be determined by market forces,” he added.
The President also assured that “It is expected that the difference between the official and black market rate will be drastically reduced.
“The policy is expected to attract inflow of foreign exchange into the economy and thereby helping to relieve the foreign exchange crisis that has plagued the country in the last one year.”
The policy is expected to provide some relief in the foreign market, as well as some kind of stimulus to the economy.