Many reactions have trailed the new Central Bank of Nigeria (CBN) policy that saw the Nigerian Naira (NGN) quoted at 253 against the U.S. dollar as a new interbank market opened today, but according to reports, no trades were yet to be agreed, as traders held off entering the new interbank market because they were nervous the foreign exchange will liquidate under the new system. Nigeria’s central bank said last week it would scrap its fixed exchange system which has seen the currency pegged at 197 to the U.S. dollar since last year.
Many believe this new ‘floating’ policy will lead to a greater economic upsurge, while others believe it will lead to economic instability. Since the Central bank revealed last week its plan to scrap the fixed exchange system, many stakeholders and expects in the sector have reacted differently with some for, and others against it.
The new development however has seen more than a hundred Naira cut off from what the official rate was last week friday, this undoubtedly comes as good news to many Nigerians who have been greatly affected by the high rise of the dollar exchange rate.
On a telephone conversation with a top official in one of Nigeria’s leading financial houses on the issue, he said “there is nothing to be glad about the free market anyway, when viewed from the critical and business angle because it means it can go up or come down without notice any day, anytime.”
However, Friday Udoh, former coordinator of Institute of Chattered Economists of Nigeria (ICEN), South-South zone, revealed earlier today that the recent decision by the Central Bank of Nigeria (CBN) to float the exchange rate of the Naira was good for economic development of the country at this critical stage of dwindling oil revenue.
Another angle to the new development is that of the traders and Forex investors, who believing that the Naira will continue on its upward slide invested more on it; now they loose a hundred Naira or more for every dollar bought last week and earlier this month.
How the new policy and the others by the Central Bank of Nigeria affects the Economy, we will all have to wait and see in the coming weeks.